Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

EU trade truce with Trump lifts German business morale

Economic IndicatorsAug 27, 2018 06:00AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: The Frankfurt skyline with its financial district is photographed in the early evening in Frankfurt

By Michael Nienaber

BERLIN (Reuters) - German business morale improved for the first time this year in August as a trade truce between the European Union and United States made company executives less concerned about a transatlantic trade war.

The Ifo economic institute said on Monday its closely-watched business climate index jumped to 103.8, beating July's reading of 101.7 and a Reuters consensus forecast of 101.9.

U.S. President Donald Trump agreed during a meeting with European Commission President Jean-Claude Juncker last month to refrain from imposing tariffs on European cars while the two sides negotiate to cut other tariffs.

"The truce between Juncker and Trump is clearly providing relief," Ifo economist Klaus Wohlrabe told Reuters, adding that export expectations in Europe's largest economy had risen significantly after dropping in July.

The August reading was the highest since February and marked the strongest monthly improvement since December 2014.

Ifo chief Clemens Fuest also cited robust domestic conditions. "The German economy is performing robustly. Current figures point to economic growth of 0.5 percent in the third quarter," he said.


German companies were once again more satisfied with their current situation and their business expectations were revised noticeably upwards, the survey showed.

The main support came from services and construction, a sector breakdown showed. But business sentiment also improved slightly in manufacturing and retailing.

August's IHS Markit sentiment survey among purchasing managers also showed the private sector shifting into a higher gear, helped by strong services activity.

"The global trade dispute so far hasn't turned out to be a sentiment killer," Alexander Krueger from Bankhaus Lampe said. "Everything is pointing to a continuation of the robust upswing."


Ifo's Wohlrabe said the strong domestic situation was also outweighing uncertainty caused by Britain's planned departure from the EU and the Turkish lira crisis. "We expect full-year economic growth of 1.8 or even 1.9 percent," he said.

The German economy grew 0.5 percent quarter-on-quarter in the April-June, helped by construction, state spending and private consumption.

However, a larger-scale trade dispute between the United States and China could also harm Germany, many of whose manufacturers rely on growth in the world's two largest economies.

"Up to now, talks and fears of new crises, trade wars or a sudden end to a mature cycle have only been talks and threats," ING analyst Carsten Brzeski said, adding all those concerns had not left any significant marks on the German economy yet.

The economy was set to continue its balancing act between the favorable effects of the European Central Bank's loose monetary policy and a lack of new structural reforms as well as between solid domestic demand and trade frictions, Brzeski said.

EU trade truce with Trump lifts German business morale

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email