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Encouraging signals from German IFO – ING

FXStreet (Barcelona) - Research Analysts at ING note that the German business confidence staged a strong rebound in November after the IFO index increased to 104.7 from 103.2 in October.

Key Quotes

“Finally stabilization. After a six-months slide, German business confidence staged a strong rebound in November, illustrating that any swan songs on the Eurozone’s biggest economy came too early. Germany's most prominent leading indicator, the Ifo index, just increased to 104.7, from 103.2 in October. Both the current assessment and the expectation component improved.”

“The latest batch of Germany’s main economic indicators looks like a special variation on the Italo-Western theme: the Good, the Bad and the Magnificient. While the improved ZEW index could be filed away as being too much focused on financial markets, last week’s disappointing PMI readings had given rise to new growth concerns.”

“In our view, the Ifo index is currently the best single leading indicator for the German economy. Therefore, today’s Ifo reading gives clear comfort for our view of an accelerating economy in the final quarter of the year.”

“Despite the strong Ifo reading, the German economy remains in a longer-lasting transition period between the end of a virtuous reform cycle to the challenges of an ageing economy. A meager average growth rate of 0.2% QoQ over the last 1 ½ year is clearly no reason to cheer but also no reason to fall into a depression.”

“Looking ahead, Germany’s export industry will face several opposing trends in the next months: on the negative side, with France and Italy stagnating, demand from the Eurozone should remain weak. On the positive side, however, the strong US recovery and renewed demand from China bode well for exports.”

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