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German business leaders have never been so confident about the future, survey shows

Confidence among German business leaders hit a "euphoric" all-time high in July, the Munich-based Ifo institute said, beating analysts' expectations of a small decline.

Published: 25 July 2017 10:50 CEST

German business leaders have never been so confident about the future, survey shows

Photo: DPA

The survey-based index, closely watched by economic observers as an indicator of future performance in Europe's largest economy, rose to 116.0 points after a reading of 115.1 in June. Analysts surveyed by data company Factset had predicted a slip in the barometer this month.

July's increase in the Ifo index was powered by improvements in businesses' view of both their current situation and the outlook for the coming months.

“Germany's economy is powering ahead,” Ifo president Clemens Fuest said in a statement. “Companies' satisfaction with their current business situation reached its highest level since German reunification” in 1990.

Looking to different sectors in the economy, manufacturers and construction firms were positive about both the present situation and the future outlook.

But while wholesalers were more optimistic for the coming months, their judgement on today's level of activity became more negative.

Retail companies became slightly more negative about both the present situation and the future.

While it was “pleasant” that the Ifo indicator had hit new heights, “it's more important that the acceleration of the upturn perceived by companies begins to be reflected in hard data” such as industrial production figures, cautioned economist Joerg Zeuner of the KfW public investment bank.

Sweden's SSAB to build €4.5bn green steel plant in Luleå

“The transformation of Luleå is a major step on our journey to fossil-free steel production,” the company’s chief executive, Martin Lindqvist, said in a press release. “We will remove seven percent of Sweden’s carbon dioxide emissions, strengthen our competitiveness and secure jobs with the most cost-effective and sustainable sheet metal production in Europe.”

The new mini-mill, which is expected to start production at the end of 2028 and to hit full capacity in 2029, will include two electric arc furnaces, advanced secondary metallurgy, a direct strip rolling mill to produce SSABs specialty products, and a cold rolling complex to develop premium products for the transport industry.

It will be fed partly from hydrogen reduced iron ore produced at the HYBRIT joint venture in Gälliväre and partly with scrap steel. The company hopes to receive its environemntal permits by the end of 2024.

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The announcement comes just one week after SSAB revealed that it was seeking $500m in funding from the US government to develop a second HYBRIT manufacturing facility, using green hydrogen instead of fossil fuels to produce direct reduced iron and steel.

The company said it also hoped to expand capacity at SSAB’s steel mill in Montpelier, Iowa.

The two new investment announcements strengthen the company’s claim to be the global pioneer in fossil-free steel.

It produced the world’s first sponge iron made with hydrogen instead of coke at its Hybrit pilot plant in Luleå in 2021. Gälliväre was chosen that same year as the site for the world’s first industrial scale plant using the technology.

In 2023, SSAB announced it would transform its steel mill in Oxelösund to fossil-free production.

The company’s Raahe mill in Finland, which currently has new most advanced equipment, will be the last of the company’s big plants to shift away from blast furnaces.

The steel industry currently produces 7 percent of the world’s carbon dioxide emissions, and shifting to hydrogen reduced steel and closing blast furnaces will reduce Sweden’s carbon emissions by 10 per cent and Finland’s by 7 per cent.

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