The business climate in the construction sector has performed particularly favorably, with the assessment of the current business situation extremely positive for months now. This illustrates that the domestic economy is increasingly the main driver of the upswing in Germany.
Germany: Companies still surprisingly upbeat
But it is also striking that that there is now a marked gap between the assessment of the current situation and expectations for the future. Companies are considerably more upbeat about the current business situation than about the outlook. In itself this is no reason for pessimism regarding a continuation of the upswing. The better the current busness situation, the less likely a further improvement down the road. A bullish assessment of the current situation and subdued business expectations are typical traits of a boom. As a rule, only when both are pointing downwards is a downturn round the corner.
In view of the latest business surveys and the hard economic indicators such as new orders and production available to date, we are penciling in quarterly gross domestic product growth of around ½ a percentage point in the second quarter of this year; on a year earlier this would still be an increase of over 3%.