German Business Sector optimism
May German Ifo survey rose above expectations to 107.7 vs 106.7 in the previous month, its highest level since the end of last year.
Following a strong growth in the first quarter (+0.7% QoQ), German industrialists continue to show some optimism as if :
the fears of a Chinese hard landing had receded for good,
the fears of the Brexit had vanished,
the fear of the fear etc.
The weaker euro, oil price and negative interest rates continue to benefit Germany. Construction is booming, attracting investors (at its highest since 1991); Germany has become number one creditor country just ahead of China (but with private funds); the unemployment rate is almost at its lowest in spite of the introduction of a minimum wage and the country’s public debt is falling quickly towards 60% of GDP, supported by negative interest rates).
Financial conditions will remain supportive as the ECB starts buying corporate bonds as of next month. Final consumption and domestic investment support growth. imports are also on the rise.
Will this be enough to support Germany’s neighbors? Well, France for one could certainly welcome a push.