German Business Sentiment Rises in February -- Update

--German business sentiment improved in February, rising to 92.4 points

--"The German economy is proving robust despite the lockdown, especially thanks to strength in industry," Ifo says

--Both components--business expectations and assessment of the current situation--posted gains

By Maria Martinez

German business sentiment improved noticeably in February, beating expectations, the Ifo Institute said Monday.

The Ifo business-climate index came in at 92.4 points in February compared with an upwardly revised 90.3 points in January. Economists surveyed by The Wall Street Journal had forecast the index at 90.1 points.

Companies have become less pessimistic about the coming six months. The expectations component rose to 94.2 points from a revised 91.5 points in January, Ifo said.

Companies also assessed their current business situation with more optimism than the previous month, and this component went up to 90.6 points in February from 89.2 points in January.

The Ifo index is based on a poll of about 9,000 companies in manufacturing, services, trade and construction. Sentiment improved across all sectors.

In manufacturing, the index jumped to 16.1 in February from 9.1 in January--its highest value since November 2018. The business-climate index rose across all major branches of the sector, Ifo said.

"The German economy is proving robust despite the lockdown, especially thanks to strength in industry," Ifo said.

The business-climate index also rose in the services sector, rising to minus 2.2 in February from minus 4.4 in January. Service providers were more satisfied with their current situation and their business expectations were less pessimistic, Ifo said.

"For the first time, the tourism industry is showing cautious optimism regarding the coming vacation season," Clemens Fuest, president of the Ifo institute said.

In trade, the business-climate index rose slightly after January's slump, increasing to minus 14.6 from minus 17.2. Expectations are still pessimistic, but not as much as the month prior, while companies' assessment of their current situation was worse driven by the fall in sales due to the lockdown.

The business climate improved in construction too, going up to minus 3.6 from minus 4.9 in January, driven by less pessimistic expectations. Construction companies assessed their current situation as somewhat worse but this was because of unusually cold weather in Germany, Ifo said.

Write to Maria Martinez at maria.martinez@wsj.com


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  02-22-21 0450ET
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