Germany's business confidence nearly reaches its lowest level in five years

Investing.com – German business confidence rebounded more than expected in March, a surprising contrast to weak business surveys that rocked global markets on Friday.

However, this corroborated the sluggishness of the country's key manufacturing sector and noted that any improvement in confidence was mainly due to domestic sectors such as retail trade and construction.

The Ifo economic institute, based in Munich, said that, on the basis of a monthly survey of companies, it went from 98.5 to 99.6 in February. The February reading was the lowest level since November 2014.

Reading exceeded economists' expectations for 98.7 and was the first improvement in seven months. The subindices for and both improved.

"The German economy is showing resilience," said Ifo President Clemens Fuest in a statement.

Germany, the world's second largest exporter, is exposed to a decline in global demand, notably because of the risks of a trade war between the United States and China, the withdrawal of the United Kingdom from the United States. 39 European Union and threats of increased tariffs imposed by the Germans. US President Donald Trump's vehicles.

"Given declining demand, companies are not planning to increase production," said the institute. On the other hand, retail and wholesale trade conditions have improved since May 2018.

Data released last Friday showed that Germany's manufacturing activity in Germany had contracted at its fastest pace in nearly six years in March, while reliable data on January production and orders – the last month available – were also below expectations. In the Ifo survey, manufacturers' responses also continued to deteriorate, with expectations falling to their lowest level since November 2012, Ifo said.

Carsten Brzeski, chief economist of ING in Germany, described the news as a "recovery attempt" for the engine of the euro zone's economy.

"In the future, the Ifo index of today puts an end to a period of pessimism and suggests that not everything is bad in the German economy (. ..) the first quarter of the German economy might not be as weak as expected, "he said.

The German Council of Economic Experts, also known as the "Five Wise Men", has reduced Germany's growth forecast for 2019 to only 0.8% last week, up from 1.5% in November.

The German economy slowed sharply in the fourth quarter, narrowly avoiding a second consecutive quarterly decline, the technical definition of a recession.