German business confidence eases but still strong

FRANKFURT, Germany (AP) — A closely watched index of German business confidence slipped for the second month in a row in April as managers’ outlook for the next half-year eased slightly, but overall sentiment remains historically strong.

The Ifo institute said Thursday that its main index fell to 110.4 points in April from 111.1 in March.

However, the index remains near record highs as Europe’s biggest economy continues to benefit from the rebound in global trade, with exports of autos and industrial machinery still strong — Ifo’s index is only slightly below the 111.3 level it reached in February, which was the strongest reading since German reunification in 1991.

Managers appear to be taking the Japanese earthquake, the ongoing debt problems in a number of euro countries and the turmoil in the Arab world, in their stride. Even the prospect of higher interest rates and oil prices don’t seem to be unsettling executives too much.

“Neither the intensifying (eurozone) debt crisis, nor the unrest in the Arabic world, nor skyrocketing commodity prices, nor the Japanese catastrophe show noticeable dampening effects on real economic activity so far,” said economist Alexander Koch at UniCredit Research.

So far, German factories haven’t seen significant supply chain interruptions, nearly six weeks after the March 11 quake in Japan. The all-important export manufacturing sector is reporting full order books, and unemployment remains low.

While managers’ assessment of their current situation improved in April, a subindex measuring their outlook for the next six months slipped to 104.7 points from 106.5.

But that “is no reason to worry,” Koch said.

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