German business confidence stormed into the new year at record highs, the Ifo institute said Friday, while the broader 17-nation eurozone tries to get to grips with its knotty debt crisis. Ifo's closely tracked reading of business sentiment climbed to 110.3 points in January from 109.8 points in December, an Ifo spokeswoman said, its eighth consecutive increase.
It was also the second straight record high since German reunification in late 1990, even though the December level was revised slightly lower from an initial reading of 109.9 points. Ifo also polls companies about expectations for the coming six months, with this index climbing to a record 107.8 points from 106.8 in December.
"Boldly going where no Ifo has gone before," ING senior economist Carsten Brzeski noted. "German business confidence surprised and continued its impressive performance of the last two years." Analysts polled by Dow Jones Newswires had expected an increase in the overall index to 110 points.
Ifo polls 7,000 German manufacturing, construction, wholesale and retail companies each month to establish the barometer of business sentiment. Its figures backed up the ZEW index of German financial market confidence earlier this week, which jumped to its highest level since July 2010 at 15.4 points.
"Overall, latest Ifo data testify to the continuing buoyancy of the German economy, which shows no sign of being hurt to any significant extent by the dampening influences related to the eurozone debt crisis," IHS Global Insight economist Timo Klein noted. Ifo president Hans-Werner Sinn said that in the key manufacturing sector, the "the business climate has clearly improved" and firms planned to hire more staff. The German government has forecast economic growth of 2.3 percent this year, following a post-reunification record of 3.6 percent in 2010.