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German Ifo Business Sentiment At 19-Month High

GermanIFO 112213

German business morale rebounded strongly in November to reach its highest level in more than one-and-a-half years, suggesting that the economy might have gathered momentum in the final quarter of the year.

The headline business climate index rose to 109.3 in November from 107.4 in October, survey results from the Munich-based Ifo Institute showed on Friday. Economists had forecast an increase in the index to 107.7.

"November's German Ifo index echoes the message of the ZEW survey and PMI that the economy might have regained a bit of momentum in the fourth quarter" after the third quarter's slowdown, said Jonathan Loynes, Chief European Economist at Capital Economics.

The Ifo's current conditions index scored 112.2 during the month, up from 111.3 in October. The expected score was 111.5. The expectations index jumped to 106.3, the highest reading since May 2011, from 103.7 in the previous month. This was forecast to rise to 104.

"Latest confidence indicators confirm that the economy should continue growing at around its potential growth rate in the coming futures," said Carsten Brzeski, an economist at ING Bank NV.

Final gross domestic product data from the Federal Statistical Office today confirmed that the economy expanded 0.3 percent in the third quarter, led by domestic demand amid a surge in capital investment. However, growth was slower than 0.7 percent in the second quarter mainly due to the weakness in external trade.

The business climate indicator for manufacturing rose considerably in November, Ifo said. The business climate improved in both retail and wholesale sectors. Sentiment among constructors rose for the first time in eight months in November.

German investor confidence rose to its highest level in four years in November, driven by hopes of economic recovery gaining momentum in the euro area, the results of a survey by the Centre for European Economic Research or ZEW showed earlier this week.

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