GERMANY: Exporters optimistic despite Trump, business climate falls

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German exporters started the year in an optimistic mood, according to Ifo Institute, as their export expectations rose from 8.2 balance points in December to 12.0 balance points in January. The German economy currently seems unfazed by the protectionist rhetoric of the new US President, the Munich-based research centre said.

The rise in export expectations was mainly driven by car manufacturers, with mechanical engineering expecting a clear uptick in foreign business too, the Ifo said.
Companies in the chemicals and electrical products branches also continued to see higher exports, although to a lesser extent than recently. Metal processing firms, by contrast, experienced a clear downturn and expect very little growth in exports in the near future.
However, on Wednesday, the institute said sentiment among German managers had weakened in January as the Ifo Business Climate Index fell to 109.8 points from 111.0 points in December with the economy economy making a less confident start to the year.
Companies expressed greater satisfaction with their current business situation, but are less optimistic about their six-month business outlook.
In the manufacturing sector, the Ifo index fell. This was due to markedly less optimistic business expectations. Manufacturers, however, were more satisfied with their current business situation. This pattern can be seen in several key branches of German manufacturing. Capacity utilisation rose by 0.3 percentage points to 86.0% and more manufacturers expect price increases.
In wholesaling, the business climate cooled down after hitting a temporary high last month. Both subcomponents fell, but purchasing by wholesalers nevertheless remains brisk. In retailing the business climate index also declined. Retailers assessed their current business situation slightly less favourably, although it remains good. They are also cautious about their short-term business outlook.
After hitting record highs in recent months, the business climate in the construction sector also cooled down. Although contractors are less optimistic about the months ahead, the current business situation index nevertheless hit a new high in January.