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German April Business Confidence Unexpectedly Rises


German business sentiment improved unexpectedly in April on rising optimism among manufacturers, shrugging of concerns about the debt crisis.

Marking the sixth consecutive monthly rise, business confidence rose slightly to a 9-month high of 109.9 in April from 109.8 in March, survey results released by the Munich-based Ifo institute showed Friday. Economists had forecast the indicator to fall to 109.5.

While confidence indicators continued to increase, pointing to a very optimistic picture of the economy, the real economy has troubles picking up pace again, said ING Bank NV's Carsten Brzeski. Instead of experiencing a quick rebound, the economy is still flirting with a technical recession, the economist noted.

According to Ifo, the current conditions index edged up unexpectedly to 117.5 from 117.4. Economists had expected the reading to drop to 117. At the same time, the expectations index remained unchanged at 102.7, but better than the expected level of 102.3.

Manufacturers saw the current business situation and their business outlook as significantly more positive, the survey found. They are raising capacity utilization, while their recruitment plans are slightly more conservative.

In retailing, business climate rose minimally, while it fell slightly in wholesaling in April. Retailers' view on their current situation deteriorated, but they were optimistic about their business outlook. On the other hand, wholesalers were satisfied with their current conditions, while expectations were clouded over slightly.

The survey respondents in the construction sector reported bleak business climate. They suggested a slight deterioration in their current business situation and they no longer remain as optimistic about their future business development. Business climate in services remained stable at 22.4 in April.

A joint report published by the country's leading economic research institutes on Thursday said the German economy is expected to grow at a slightly faster pace than estimated in 2012, as the risks surrounding the global economy receded.

Gross domestic product is forecast to rise 0.9 percent this year, slightly faster than the previously projected 0.8 percent growth. For 2013, the institutes forecast 2 percent growth.

Earlier this week, the International Monetary Fund raised the 2012 growth projection for Germany to 0.6 percent.

by RTTNews Staff Writer

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