What Volkswagen emissions cheating scandal? German business confidence stays strong in October

 
Emma Haslett
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"Meh": German industry remains unharried by the VW scandal (Source: Getty)

Volkswagen bosses may be busily sackcloth-and-ashing, but here's evidence the rest of the business world remains fairly unconcerned about the company's emissions cheating scandal: figures published this morning suggested that while German business confidence has taken a dip in the past month, it's still pretty resilient.

The Ifo Business Climate Index, which measures confidence among German trade and industrial firms, dipped to 108.2 points in October, down from 108.5 points in September and the first drop since June this year.

German carmakers in particular seemed at ease with the situation: the index for the automotive sector in the country actually rose, Hans-Werner Sinn, president of the Ifo Institute, said.

"Assessments of the current business situation and business expectations both improved. Firms plan to ramp up production."

Although he did add that "exports... are not expected to provide further stimuli".

The news wasn't quite as good for Germany's manufacturing sector as a whole, where the index fell for the third month in a row.

"Manufacturers scaled back their very good assessments of the current business situation [although] they nevertheless expect business to pick up in the near future."

Carsten Brzeski, chief economist at Ing-Diba, said the figures suggested German businesses are "filing the Volkswagen scandal as a one-off" - as well as shrugging off the risk from a possible slowdown in China and emerging markets.

"Continued growth in the service sector, strong domestic demand and an outside world that might be slowing but is definitely not falling off a cliff, should keep the German economy on the sunny side.

"[And] let’s not forget that the German economy is one of the largest beneficiaries of the European Central Bank's quantitative easing programme, taking immediate support from a weak euro and low interest rates."

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