Tags: German Business Sentiment Hits Record High

German Business Sentiment Hits Record High

Friday, 17 Dec 2010 07:30 AM

German business morale rose to its strongest level since 1991 in December, buoyed by an increasingly strong domestic sector that is helping the economy power ahead of weaker euro zone peers.

The Munich-based Ifo think tank said on Friday its business climate index, based on a monthly survey of some 7,000 firms, rose to 109.9 from 109.3 in November. The rise was the seventh in a row and surpassed expectations for a fall to 109.1.

The reading amplified the positive message from other German data released this week, showing Europe's largest economy is leaving behind those weaker members of the euro zone struggling with a debt crisis.

"The German economy is truly in top form," said DekaBank economist Andreas Scheuerle.

"The manufacturing sector doesn't see the debt crisis as a burden because Ireland and Greece are such small markets for German companies," he added. "At the same time, the depreciation of the euro is giving companies windfall earnings."

Reflecting the strength of the recovery, German steelmaker ThyssenKrupp said late last month it saw profit rising next year, driven by economic growth in Germany and emerging markets.

Ifo indices on current conditions and expectations both rose. The expectations index hit a record high, suggesting the recovery will power on into the New Year.

"The German economy is entering the New Year at full throttle," said ING economist Carsten Brzeski.

Another survey released on Thursday showed Germany's private sector grew at the fastest rate in 4-1/2 years in December, when investor sentiment also rose on a brightened outlook for exports and domestic demand.

"At this level, the Ifo points to very strong annual GDP growth of around 6 percent — far better than Q3's 3.9 percent, implying that the recovery has further to run," said Capital Economics analyst Ben May.

Rising domestic investment and private consumption will help drive the German economy in 2011, Ifo said earlier this week, raising its forecasts for economic growth this year and next to 3.7 percent and 2.4 percent respectively.

Other economic institutes have this week also raised their growth forecasts for Germany as the recovery powers ahead.

Their upbeat assessments reflect growing evidence that Germany's domestic economy is contributing more to the recovery as households' confidence grows. Consumer morale rose going into December to its highest since October 2007.

Ifo economist Klaus Abberger said Germany's retail sector was also experiencing strong Christmas trade.

"Business trade went well. The last week however is extremely important," he told Reuters.

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German business morale rose to its strongest level since 1991 in December, buoyed by an increasingly strong domestic sector that is helping the economy power ahead of weaker euro zone peers. The Munich-based Ifo think tank said on Friday its business climate index, based...
German Business Sentiment Hits Record High
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2010-30-17
Friday, 17 Dec 2010 07:30 AM
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