peter-loescher

By Jana Randow Feb. 23 (Bloomberg) — German business confidence unexpectedly fell for the first time in 11 months in February, as below-average temperatures and snow damped construction and retail sales. The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, fell to 95.2 from 95.8 in January. Economists expected a gain to 96.1, according to the median of 37 forecasts in a Bloomberg News survey . The index reached a 26-year low of 82.2 in March last year. Germany’s recovery from its worst recession since World War II stalled at the end of last year as domestic spending waned. The coldest winter in 14 years may damp growth in the current quarter. “You just have to look out of the window — for the longest time no crane moved in the snow,” said Ralph Solveen , head of economic research at Commerzbank AG in Frankfurt. “But manufacturing and exports seem to run like clockwork and I’m confident the recovery will continue.” A global pickup is fueling foreign demand for German goods . Greece’s fiscal crisis has also pushed the euro to a nine-month low against the dollar, boosting export returns. The euro eased to $1.3657 at 10:20 a.m. in Frankfurt from $1.3679 before the Ifo report was published. It has dropped 10 percent since Nov. 25. Current Situation The Bundesbank forecasts Europe’s largest economy will grow 1.6 percent this year. It shrank 5 percent in 2009. Ifo’s gauge of the current situation fell to 89.8 from 91.2, while a measure of expectations rose to 100.9 from 100.6. Ifo President Hans-Werner Sinn said retailers “experienced a setback” in February and construction activity is “strongly constrained by the weather conditions.” “The economic recovery is expected to continue when winter is over,” he said in a statement. Unemployment rose in January, damping consumer confidence. Investor optimism declined this month as concern about budget deficits in Greece, Spain and Portugal rattled financial markets. “A weaker euro should caress business expectations and demand from emerging markets, Japan and the United States will boost exports,” said Stefan Bielmeier , an economist at Deutsche Bank AG in Frankfurt. “Germany is relatively fit and doing fine.” Germany’s manufacturing industry expanded at the fastest speed in more than two and a half years this month, a survey of purchasing managers showed on Feb. 19. Exports jumped 3 percent in December for their fourth successive monthly gain. Bayerische Motoren Werke AG , the world’s largest maker of luxury cars, predicts an increase in auto deliveries in China of at least 10 percent this year after sales more than doubled in January. Siemens AG , Germany’s biggest engineering company, plans to double its annual investment in India, Chief Executive Officer Peter Loescher said on Feb. 2. To contact the reporter on this story: Jana Randow in Frankfurt at jrandow@bloomberg.net .

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German Business Confidence Unexpectedly Drops as Cold, Snow Curb Consumers

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