FRANKFURT (MktNews) - The surprise rise in west Germany's Ifo sentiment index in January was due to a jump in retail and wholesale sentiment and a slight increase in sentiment in the construction sector, according to details of the Ifo survey released Thursday.
As reported last week, the January overall west German business sentiment index -- which combines sentiment in the manufacturing, construction, retail and wholesale sectors -- came in above all expectations, rising for the first time since May 2000 to 97.5 from 96.8 in December, mainly due to a rise in the current conditions index.
As shown by the details of the Ifo sentiment index released today that rise was likely due almost entirely to the German government's tax cuts, as the leap in retail and wholesale sentiment indicates.
The sentiment diffusion index for the west German manufacturing sector -- which makes up 80% of the overall Ifo index -- continued its decline in January, down to +7.4 from +8.4 in December on a seasonally adjusted basis. (see separate story).
Retail business sentiment rose to -8.9 in January from -19.4 in December. While retail expectations fell to -7.7 from -0.2 in December, sentiment on current conditions rose to -10.2 from -36.7 December.
Wholesale sentiment rose to -5.5 from -14.4 in December. While wholesale business expectations rose to -6.7 from -10.7, sentiment on current conditions rose to -4.2 from -18.0 in December.
The upswing was less marked in construction sentiment which also rose in January, up to -32.0 from -33.0 in December. While business expectations fell to -14.7 from -11.3, sentiment on current conditions rose to -47.6 from -52.2 in December.