Germany's business confidence rose in August to its highest level in three years, according to a key survey Wednesday, suggesting Europe's biggest economy continues to grow as companies plan to hire more and manufacturers and retailers enjoy improved demand.
The Ifo research institute, based in Munich, said its business confidence index rose to 106.7 points from 106.2 points in July, beating market expectations of a slight decline.
Although the closely watched survey marked its sixth consecutive increase, it showed business expectations down slightly from 105.6 to 105.2, Ifo said.
Confidence remains strong despite worries in markets about growth prospects in the US, a key export market. Companies are still very confident regarding their six-month outlook, though somewhat less so than in the previous month, it said.
He noted that strength in manufacturing sentiment is also increasingly based on renewed domestic investment activity, not only a comfortable order backlog from abroad.
The overall business confidence index last stood higher before the financial and economic crisis in June 2007 at 106.8. In the retailing industry, the business climate has also brightened further, bolstered by low unemployment, whereas the outlook is somewhat less optimistic in the construction sector, it said.
The export-driven German economy contracted by 4.7 percent last year, easily its worst performance since World War II, but economists are forecasting gross domestic product to grow by two to three percent in 2010. Economy Minister Rainer Bruederle has said growth of "well over 2 percent" is possible.
In July, the Ifo index posted its biggest increase since the country's reunification in 1990, jumping to 106.2 points from 101.9 points.
"The combination of the improving labour market and a strengthening domestic demand is a key element of a self-sustaining upsurge," he said.
Germany's unemployment rate has declined over the past months. In seasonally adjusted terms, the jobless rate slipped to 7.6 percent in July from 7.7 percent in June, and a total of 3.192 million people were registered as unemployed.
Finance Minister Wolfgang Schaeuble welcomed the latest economic data, but remained cautious in his outlook for next year's GDP growth. "Little is indicating that we will get similarly good figures next year," he told journalists.
Comments
Comments are closed.