Germany’s Ifo institute and France’s statistics office issued reports indicating that business morale in both countries improved for the fifth straight month in September. German business climate index rose from 92.5 in August to 93.4 in September, the highest reading since 95.9 in February. Europe’s biggest economy is stabilizing despite a resurgent number of COVID-19 cases, Ifo President Clemens Fuest said.
German company investments, household spending, and trade collapsed at the height of the health crisis, contributing to a 9.7% economic contraction in the second quarter of 2020. The government has tried to soften the blow by rolling out stimulus measures since May, funded by record new borrowing.
According to Ifo, business morale in the manufacturing sector increased considerably thanks to optimistic expectations on exports. Meanwhile, sentiment fell in the service sector for the first time in five months as rising infections worsened morale in the tourism and hospitality industries. The institute expects the German economy to expand by 6.6% in Q3 and 2.8% in Q4.
In France, the business confidence index increased from 90 in August to 92 in September, the highest since February. The index for the manufacturing sector jumped from 92 to 96, while the index for the services sector increased from 93 to 95. Business morale brightens despite the government’s decision to tighten restrictions on gatherings amid resurging coronavirus cases.
