Sentiment in corporate Germany dimmed for the sixth consecutive time in February. This is shown by a current ifo-Institut survey. The deterioration was especially pronounced as regards companies’ assessment of the current business situation, which is now at the lowest level in two years. That said, expectations for the coming months also continued to head south.
The international strains quite evidently still impact more negatively on corporate Germany than the overall good situation on the domestic market does positively. The German economy’s strong gearing to exports has a negative effect in such a setting. The reliance on foreign trade that provides an additional boost in periods when the global economy blossoms is now braking German industry.
Finally, no solution to Brexit is in sight. And the US President’s threats of customs tariffs will presumably have caused additional uncertainty among carmakers over the last few days.
One positive sign for the coming months is at least that the decline in expectations has slowed appreciably. This may point to a forthcoming trend turnaround in corporate sentiment – at least if a hard Brexit gets avoided and the tensions in global trade do not become worse.