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Business sentiment among German firms remains strong

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Staff Writer | July 18, 2017
The business climate in Germany is expected to improve strongly over the next 12 months, according to the latest IHS Markit Business Outlook survey data.
Business sentiment Germany
Germany   IHS Markit Germany Business Outlook
Private sector firms expect output to rise, with the overall degree of sentiment among the strongest since the series started in late-2009.

Moreover, the outlook for employment is the strongest registered by the survey to date.

Companies expect cost pressures to remain elevated, with input prices set to rise at the fastest pace in over six years.

The net balance for business activity remains firmly in positive territory at +40%, down only slightly from February’s reading of +44%.

Germany has exhibited stronger sentiment than France, Italy, and the UK, but is less optimistic than Spain.

Firms expect new products and markets to underpin growth of business activity over the next 12 months.

Other factors include the prospect of a ‘soft’ Brexit, stability within the EU, better relations with Russia and growth in Asian markets.

On the other hand, political risks, security concerns, US economic policy, geopolitical tensions, Brexit in general and a slower global economy are all mentioned as threats to growth.

By sector, German manufacturers are increasingly optimistic regarding the 12-month outlook for production.

The net balance for goods output has risen for the fifth successive survey to +57%, the jointsecond highest in the series history.

In contrast, the related figure for the service sector is +31%, lower than in February but slightly above the long-run average since 2006 (+29%).

Globally, the outlook for business activity has remained unchanged from that seen in February, with the net balance stable at +31%.

This is the joint-highest since June 2014.