German business confidence highest since reunification: Ifo

24th November 2010, Comments 0 comments

Business confidence in Germany has risen to its highest level since the country reunified in 1990, the Ifo institute said on Wednesday, as Europe's top economy continued a strong recovery.

The widely watched reading of sentiment rose to 109.3 points in November, compared to 107.7 points in October, its sixth consecutive rise.

Analysts polled by Dow Jones Newswires had expected the indicator to be flat at 107.6 points.

"I confirm it's the highest level since reunification," an Ifo spokesman told AFP.

"The Ifo Business Climate indicator for industry and trade in Germany has risen again in November and is now above the level of the 2006/2007 boom," the institute said in a statement.

"The upswing in the German economy is gaining more and more strength."

Ifo surveys around 7,000 German manufacturing, construction, wholesale and retail companies each month to establish the index of business sentiment.

A separate index measuring how businesses assess their current position also rose strongly, to 112.3 points, the highest level since May 2007.

"Maybe it is a miracle after all," said Carsten Brzeski from ING bank.

"Amidst new financial market turmoil and sovereign debt woes in the eurozone, the German economy seems to be an island of happiness."

After suffering the worst recession in more than six decades in 2009, Germany has experienced an impressive recovery in 2010, driven by improved global demand for its goods.

Statistics released on November 12 showed that economic growth in Germany slowed slightly in the third quarter to 0.7 percent but this was still far ahead of its neighbours France and Italy.

Germany's world-class export engine is still running at full throttle, with sales abroad growing by three percent in September, but growth is becoming more balanced, with domestic demand also contributing.

In another piece of positive news, the GfK indicator, which measures the confidence of consumers, also rose in November.

Nevertheless, there have been some worrying signs coming from industry, with both production and orders disappointing recently, leading some to believe Germany is heading for a sharper-than-expected slowdown in 2011.

© 2010 AFP

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