Ashton Whiteley: German Business Confidence Wobbled Ahead of Election

 According to a survey by Ashton Whiteley, in the weeks leading up to Sunday’s federal election, German business confidence unexpectedly declined. Results of the survey suggest that a recent upturn in the German economy could falter in the coming months.

A Munich-based economic institute stated that its business climate index, which relies on data gathered from more than 7000 companies, fell from 115.9 to 115.2 last month.

The survey was carried out in the weeks before the election. The recent federal election saw Chancellor Merkel secure a fourth-term victory. The results of the survey do not reflect the results of the election or that Merkel will likely switch coalition partners.

Analysts at Shanghai, China-based Ashton Whiteley believe that the probable reason for the deterioration is the strong Euro as opposed to political uncertainty.

Confidence in the retail and construction sectors improved dramatically recently while sentiment from wholesaling and manufacturing declined.

With an expanding population, low-interest rates and greater job security spurring a property boom in Germany, construction index figures have broken records in recent weeks.
 
Also boosting the construction sector is increased government expenditure on infrastructure due to the growing migrant population.

While Sunday’s election result could fuel uncertainty in business sentiment and contribute to a weaker than anticipated third quarter for Germany, analysts at Ashton Whiteley are of the opinion that Europe’s largest economy would still have a good year overall.

The BDI industry association has stated that it anticipates the German economy will grow by upwards of 2 percent this year. If this is the case, it would be the biggest growth in six years.

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