German business confidence index creeps higher | Business| Economy and finance news from a German perspective | DW | 25.05.2009
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German business confidence index creeps higher

German business confidence rose in May for the second time in a row. But observers say that the increase was less than forecast, and that the recession is far from over in Germany.

Wind sock blowing in the wind

Which way is the wind blowing in the German economy?

The Munich-based Ifo research institute said its closely-watched business-confidence index climbed to 84.2 points from 83.7 points in April.

This was the second increase in a row for the poll of 7,000 business leaders. But a Reuters poll showed respondents had expected the index to increase to 85 points, and so reaction to the news was mixed.

Mixed signal

Economists take the Ifo reading as a serious measure of Germany's economic outlook.

Some read the poll as a sign of a rosy future.

Analyst Joerg Kraemer from Commerzbank told Reuters the measure was a "further clear signal that the plunging German economy is a thing of the past. The recession is losing speed, and could be over by the autumn."

'Anemic' improvement

Still, he warned that the coming improvements shouldn't be overestimated. Any improvements after that will be "anemic."

Other analysts saw the data in a less positive light. Despite the general improvement in sentiment, leading economic forecasters see Germany facing six percent contraction in its economy this year, which is likely to trigger an increase in unemployment.


Editor: Chuck Penfold

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