Munich-based MAN SE, Europe’s third-biggest truckmaker, is scaling back production by... Read More
The Ifo institute’s business climate index, based on a survey of 7,000 executives, dropped to 104.7 from 106.3 in August. Economists predicted a decline to 105.8, according to the median of 36 estimates in a Bloomberg survey. The index is now at its lowest since April 2013.
Europe’s largest economy contracted in the
second quarter and euro-area growth stalled as international political tension and stubbornly high unemployment sapped sentiment. The risks prompted the European Central Bank this month to say it’ll be more active in adding stimulus to the euro area by starting asset purchases.
“Increased geopolitical tensions and weakening emerging-market economies, including China, are taking a toll,” said Carsten Brzeski, chief economist at ING-DiBa in Frankfurt. “At least for the ECB, today’s Ifo index is good news. It should hush German protests against the latest asset-purchasing program and even against future possible quantitative easing.”
Ifo’s gauge of current conditions slid to 110.5 in September from 111.1 the previous month. A measure of business expectations fell to 99.3 from 101.7.
Employees work on the halogen light production line at the Royal Philips NV automotive... Read More
Political Tension
The euro fell after the report and traded at $1.2857 at 10:35 a.m. Frankfurt time, little changed on the day. Germany’s DAX Index (DAX) of stocks was down 0.2 percent at 9,575.The European Union and the U.S. have ramped up sanctions against Russia, citing its support for separatists in Eastern Ukraine. German Chancellor Angela Merkel said yesterday that industry backing of the restrictions has been crucial and a solution to the conflict is “far off.” Germany is Russia’s biggest EU trading partner.
Munich-based MAN SE, Europe’s third-biggest truckmaker, is scaling back production by cutting hours for as many as 4,000 workers, partly because of a drop in demand in Russia.
Other data has pointed to weaker growth. A gauge of German manufacturing activity expanded at the slowest pace in 15 months in September as new orders fell, and the ZEW index of investor confidence dropped for a ninth month. While factory orders and industrial production gained in July, the Bundesbank warned that they were boosted by factors such as the dates of school holidays.
ECB Stimulus
Since June, ECB President Mario Draghi has cut interest rates to record lows, offered cheap long-term cash to banks, and pledged to buy asset-backed securities and covered bonds in a bid to revive the euro-area economy. He has said policy makers will go further if needed, leaving open the option of quantitative easing, or large-scale buying of sovereign debt.Euro-area consumer prices rose 0.4 percent in August from a year earlier, the weakest pace in almost five years, and unemployment is near a record at 11.5 percent.
Speaking at the European Parliament in Brussels on Sept. 22, Draghi said the ECB is moving to a more “active and controlled management of our balance sheet” as “unacceptably high unemployment and continued weak credit growth” pose downside risks to the economy.
He said in an interview with Europe 1 Radio today that he will do “whatever it takes within our mandate” to protect the single currency.
To avoid crisis-ridden Europe, German companies are embarking on their biggest-ever acquisition spree in the U.S., chasing deals that promise innovation and growth.
Merck KGaA this week agreed to acquire medical-equipment manufacturer Sigma-Aldrich Corp. for more than $16 billion, in what would be the biggest acquisition in its 346-year history. Siemens AG said it would buy Dresser-Rand Group Inc., a provider of energy equipment based in Houston, for $7.5 billion. In two deals last week, SAP AG (SAP) agreed to buy Concur Technologies Inc. for $7.4 billion, and ZF Friedrichshafen AG bid $11.7 billion for TRW Automotive Holdings Corp.
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