Germany and those confidence surveys

money.jpgI reported on this a couple of days back implicitly asking whether we should trust the news interpretations coming of out Germany and in all modesty I think that my short post showed considerable volatility in the German confidence surveys or at least enough to merit that all the talk of a sustainable German (and Eurozone) recovery be thoroughly burried ... at least for a while. All my sources on this have been from the FT so I do not know whether the Economics journalists in London are fumbling a bit at the moment ... I like the FT very much but all this (see my previous post linked above) should not be taken at face value. And yesterday ... we were at again but perhaps we are getting closer the truth?

(From the FT)

What does this confidence survey really bring to the table in terms of predicting the economy's route and immediate future ... ?  

'German business confidence has slipped from a 15-year high, with optimism about the next six months tumbling to the lowest level this year, according to a closely-watched survey.

The fall in the Munich-based Ifo institute’s German business climate index, from 106.8 in June to 105.6 in July, is the latest sign that the eurozone’s economic upturn might have peaked. It comes as the European Central Bank prepares to raise its main interest rates by another quarter percentage point to 3.0 per cent next week to head off inflationary threats.

The Ifo is still signalling strong growth by eurozone standards, economists said, and the previous month’s figures might have been distorted by the football World Cup euphoria. But Gebhard Flaig, Ifo director, said that “the surveyed companies appeared no longer completely happy with the current business situation”.'

Moving closer to a conclusion here ... Mixed signals from the rest of Europe but somewhat (decively) negative signals from Germany?

'Business confidence surveys in other eurozone countries have shown a mixed picture this week, falling in Italy and Belgium while rising in France and the Netherlands. However, the latest data has been consistent with the widely-shared view among economists that eurozone growth was strong in the second quarter but is likely to slow in the next few months.


Business confidence in Germany – Europe’s largest economy - might have been hit this month by concern about the scope of structural reforms introduced by the government of Angela Merkel, chancellor. Oil prices and the expected VAT rise were other factors cited by economists.

Ifo reported that business had also become more pessimistic about export opportunities. At the same time, German consumer spending – long the Achilles’ heel of Europe’s largest economy - remains weak. Retailers have become gloomier about their current and future situation, Ifo said.'