In eastern German manufacturing sentiment weakened marginally, but remains at a very high level. The manufacturers surveyed expressed slightly less confidence in their six-month business outlook. They also expected stronger stimuli from exports than in recent months and were slightly happier with ongoing business.

Eastern German wholesalers marginally scaled back both their assessments of the current business situation and their business expectations in December, following last month’s modest increase in both sub-components. The business climate also clouded over in eastern German retailing. Despite slightly better ongoing business (seasonally-adjusted), retailers were clearly less confident about the next six months. They also expect prices to continue to rise.

In eastern German construction the business climate brightened after deteriorating for two consecutive months. Contractors were more satisfied with their ongoing business than in November and strongly upwardly revised their business expectations for the first half of 2018.

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In manufacturing the index also hit a new record high. Manufacturers were markedly more satisfied with their ongoing business. Optimism about the business outlook also surged to its highest level to date in 2017. The main drivers behind these developments were capital goods producers, and especially mechanical engineering firms. Capacity utilisation in manufacturing rose by 0.4 percentage points to 87.1 percent. It is now significantly higher than its long-term average of 83.7 percent.

In wholesaling the business climate cooled down, but remains at a high level. Wholesalers were less satisfied with their current business situation. They were also slightly less optimistic about their business outlook. In retailing the business climate index soared. Assessments of the current business situation were far better and retailers also expressed greater optimism about the months ahead. More retailers plan to increase prices.

In construction the index continued its record run. This was once again primarily due to more optimistic business expectations on the part of contractors. However, they scaled back their very good assessments of the current business situation somewhat.

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Notably, the economy has shown improvement despite the absence of any new structural reforms for years.

In manufacturing, the index hit a new record high. Manufacturers expressed greater optimism about the short-term future. Capacity utilisation rose significantly by 0.7 percentage points to 86.7 percent, the highest since late 2008.

In wholesaling, the business climate improved again on the back of far more optimistic expectations. But, assessment of the current business situation came down from the record high in June. In retailing, the index dropped. Retailers were far less satisfied with their current business situation. Their optimism about the short-term business outlook is also not encouraging. Nevertheless, at present, they remain at a very high level.

In construction,contractors are happy with their current situation and expect business to pick up in the coming months.

Overall in industry, the combination of strong orders and low inventories is as good as in mid-2006 and late-2010.

But even as the domestic economy gains momentum, factors abroad may pose a few risks — protectionist measures by the US, a weakening of the UK economy in the wake of Brexit negotiations and a slowdown of the French economy.

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In manufacturing, the index rose slightly. Assessments of the current business situation remained unchanged at a very high level. Manufacturers are slightly more optimistic about the short-term future. Developments in demand and order levels were very favourable. Manufacturers plan to ramp up production.

In wholesaling, the business climate improved for the third month in succession to reach its highest level since December 2010. Assessments of the current business situation hit a new record high and expectations were also upwardly revised.

In retailing,  the index improved notably. Retailers were far more satisfied with their current business situation. Their optimism about the short-term business outlook reached its highest level since September 2015.

In construction, the index fell. Contractors marginally scaled back their assessments of the current business situation and business expectations, which nevertheless remain at a high level. Their very good order situation is expected to boost prices for construction services.

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