German business sentiment improved for the eighth consecutive month in September, almost reaching levels last seen before the collapse of Lehman Brothers in September 2008.
An Ifo Institute for Economic Research index shows that expectations for the business climate in Germany rose from 90.5 in August to 91.3 in September.
Yet it is the comparison with last year’s September data that gives away the most interesting development. Back then, the index stood at just 86.1.
“When we completed the survey for September 2008, the news of the Lehman Brothers collapse was not reflected in the respondents’ answers,” says Klaus Abberger, an economist at Ifo.
“Even in the following months the respondents were probably not fully aware of the consequences,” he says. The business climate index started falling only in October 2008.
Ifo’s indicator measuring the economic expectations for the coming six months, which is published alongside the business climate index, rose from 95 to 95.7. This also compares favourably with the 86.1 measured in September last year.
The indicator for the current economic situation rose from 86.2 to 87 points, but is still down from the 99.4 of its pre-Lehmans level.
“In light of the catastrophic developments over the past 12 months, this is good news,” says Hans-Werner Sinn, the president of the institute.
As manufacturing firms no longer regard their present business conditions as quite so negative, Ifo says in a statement, the sector indicator has recovered somewhat. Respondents also anticipate a more favourable course of business in the next six months.
In construction the business climate has clouded over somewhat. Although sentiment has hardly changed from that in August, respondents are more sceptical than in the previous survey. Within the wholesaling and retailing sector, the index has risen.
In both sub-sectors, respondents are less critical regarding business developments. However, wholesalers are nearly just as dissatisfied with their current business situation as in August. Retailers are slightly more positive, assessing it now as nearly satisfactory.
Scepticism over the export sector has also subsided. On the downside, however, more firms are planning redundancies.
The Ifo Business Climate index is based on some 7,000 monthly survey responses of firms in manufacturing, construction, wholesaling and retailing. Respondents give their assessment of the current business situation and their expectations for the next six months.
Germany, Europe’s biggest economy, escaped recession last month and reported a GDP growth rate of 0.3%, between April and June.
Subscribe to our Tweets.