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Economy in Brief

German Biz Confidence In a Small Rebound: What's All the Fuss?
by Robert Brusca January 27, 2009

The German IFO index made a small rebound in January and that has caused some excited stirring in markets. Still the IFO Business climate index is very weak and the EMU sentiment index for Germany (Dec) is even lower than it was in 2001 at the bottom. There should be little excitement is such low persisting readings and on such a weak rebound.

The table above shows that the Biz Climate, Current Situation and Biz Expectations indices all are down about 20% Yr/Yr. Taken as a percent of their respective ranges since early 1991 the business climate index is in at the bottom one-percentile of its range, the current situation is in the bottom 12% of its range and business expectations are in the bottom nine percent of their range. These are all weak global range positions and year over year standings.

That markets want to put a positive spin on such a poor showing tells us of the poor state of market psychology right now. Clearly the chart (above) shows little to cheer about. In any event we would expect a much more substantial rebound in expectations even before the current situation improves. Nothing like that is in train. The optimism registered today, is just that based on nothing in particular.

IFO Survey: Germany
  Percent: Yr/Yr Index Numbers
Current Dec
Biz Climate -19.8% -20.0% -17.8% -13.4% -11.0% 83.0 82.7 86.3% 1.1%
Current Situation -19.8% -18.1% -14.2% -8.9% -9.4% 86.8 88.8 90.3% 11.9%
Biz Expectations -19.8% -21.9% -21.3% -17.6% -12.6% 79.4 76.9 82.4% 8.7%
average & range since Apr-91
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