Business confidence posts surprise rise

Germany's Ifo business confidence index posted a surprise rise on Friday, suggesting investors remain positive about prospects for Europe's top economy despite the Greek debt crisis and concerns about US growth.

Business confidence posts surprise rise
Photo: DPA

The monthly Ifo business climate rose in June, its first increase since February, to 114.5 points from 114.2 points in May, beating expectations of 113.5 points, according to a poll of economists by Dow Jones Newswires.

“The German economy is experiencing a robust upswing. The business climate in manufacturing continues to be good,” Ifo President Hans-Werner Sinn said.

The closely-watched index is based on a survey of around 7,000 firms in manufacturing, construction, wholesaling and retail.

The Financial Times Deutschland suggested that the German economy might be immune to the risks of the debt crisis, with the Ifo index this month reaching the highest level since reunification back in 1990.

Yet managers may not be as optimistic as it seems, the FTD said. The mood among industrial and wholesale sectors is high, but values for retail are less rosy, with traders sceptical about the immediate future.

Earlier this week, the Centre for European Economic Research (ZEW) survey of economic sentiment fell sharply on worries about the eurozone debt crisis and growth prospects for the US.

Ben May, economist at Capital Economics, said the Ifo “defies” other evidence that the German economy’s impressive recent expansion is slowing.

“Nonetheless, we still think that (gross domestic product) growth will weaken over the remainder of the year,” May said in a research note.

“All in all this is a positive surprise. We had expected a downturn of the index,” said Marco Bagel from the Postbank told the FTD. “One can assume then that the second quarter will turn out to have been better than one had expected.”

“We will get a normalisation. We are well away from stagnation,” said Dirk Schumacher, economist at Goldman Sachs.

But most prognoses suggest a weakening of growth in the second half of the year.

AFP/The Local/hc

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‘We agree to disagree’: Still no progress in marathon SAS strike talks

By lunchtime on Friday, talks between the Scandinavian airline SAS and unions representing striking pilots were still stuck on "difficult issues".

'We agree to disagree': Still no progress in marathon SAS strike talks

“We agree that we disagree,” Roger Klokset, from the Norwegian pilots’ union, said at lunchtime outside the headquarters of the Confederation of Swedish Enterprise in Stockholm, where talks are taking place. “We are still working to find a solution, and so long as there is still some point in continuing negotiations, we will do that.” 

Mats Ruland, a mediator for the Norwegian government, said that there were “still several difficult issues which need to be solved”. 

At 1pm on Friday, the two sides took a short break from the talks for lunch, after starting at 9am. On Thursday, they negotiated for 15 hours, breaking off at 1am on Friday morning. 

READ ALSO: What’s the latest on the SAS plane strike?

Marianne Hernæs, SAS’s negotiator on Friday told journalists she was tired after sitting at the negotiating table long into the night. 

“We need to find a model where we can meet in the middle and which can ensure that we pull in the income that we are dependent on,” she said. 

Klokset said that there was “a good atmosphere” in the talks, and that the unions were sticking together to represent their members.

“I think we’ve been extremely flexible so far. It’s ‘out of this world’,’ said Henrik Thyregod, with the Danish pilots’ union. 

“This could have been solved back in December if SAS had not made unreasonable demands on the pilots,” Klokset added. 

The strike, which is now in its 12th day, has cost SAS up to 130m kronor a day, with 2,550 flights cancelled by Thursday, affecting 270,000 passengers.