Business confidence in Germany picks up in April

 
Harriet Green
Follow Harriet

The positive mood among German businesses improved in April, according to the latest data from think-tank Ifo, with a reading of 111.2 - from 110.7 in March and economists’ prediction of a slip to 110.5.

The results, say Capital Economics, point to further recovery, reversing last month's fall. Current assessment came in at a solid 115.3, from 115.2 in March. An improvement to 115.7 was expected.

Continued weakness in China and the situation in Ukraine were expected to dent sentiment to some extent, but the readings for Europe’s powerhouse economy still point very much to an ongoing recovery in the Eurozone.

Christian Schulz of Berenberg comments that the country has shrugged off concerns over Ukraine.

Germany is increasingly enjoying the benefits of its strengthening domestic demand as well as the broadening recovery in its most important export markets, the Eurozone and other developed economies.

The Ifo’s survey follows stronger-than-expected manufacturing numbers out yesterday.

The small increase in current conditions now looks consistent with annual GDP growth as high as three per cent, says Jennifer McKeown of Capital Economics, adding:

The rise in the latter is particularly encouraging after falls in the previous two months – note that, historically, turning points in this index have tended to be followed by a turn in business conditions around 6 months later.

That said, the level of expectations is still lower than earlier in the year, suggesting that a significant pick up in the pace of recovery is unlikely. Capital Economics continue to expect growth of around 1.5 per cent this year and 2.0 per cent in 2015: "Not strong enough to drive a rapid recovery across the euro-zone as a whole or to take the pressure off the ECB for more policy action."