German business morale rises

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    BERLIN- High demand for industrial goods, brighter export expectations and government support for companies hit by lockdowns to slow the spread of the coronavirus contributed to an unexpected rise in German business morale in December, a survey showed.

    The Ifo institute said its business climate index rose to 92.1 from an upwardly revised reading of 90.9 in November.

    “Companies were satisfied with their business situation,” Ifo President Clemens Fuest said. “They are looking at the first half of the year with less scepticism. But the lockdown is hitting some branches hard. The German economy is on the whole showing its resilience.”

    Germany imposed a hard lockdown on Dec. 16 that forced all nonessential businesses to shut to bring down stubbornly high infection numbers and record-high deaths.

    Ifo said only 20 percent of companies it surveyed sent their responses after Germany took the decision last weekend to go into lockdown.

    The new tightening in coronavirus restrictions means that activity will remain subdued at the start of next year before picking up in the second quarter.

    Melanie Debono, Europe economist at Capital Economics, said the survey suggested that Germany could avoid a contraction in the fourth quarter.

    “All told, the recent tightening in lockdown measures means that services and retail activity will continue to struggle in the near term,” she said in a note to clients. “But, on balance, we now think that Germany’s economy may expand a touch in Q4 thanks to the continued strong growth in industry.”