Friday, February 22, 2013

German business morale jumps at fastest pace in over 2 years


German business morale surged at its fastest pace in over two years in February, pushing higher for a fourth consecutive month and pointing to a solid recovery in Europe's largest economy after a dismal end to 2012.

The Munich-based Ifo think tank said on Friday its business climate index, based on a monthly survey of some 7,000 firms, rose to 107.4 in February, up from a revised 104.3 in January.

That was the biggest one-month rise since July 2010 and beat even the highest estimate of 106.2 in a Reuters poll of 41 economists, which had a median forecast of 105.0. The euro and European shares rose after the data, while German bond futures fell. 

Germany's economy shrank by 0.6 percent in the fourth quarter, succumbing to a sharp fall in demand from its euro zone trading partners, but economists expect the gloom to be short-lived and do not see Germany slipping into a recession, defined as two quarters of contraction.

"German economic confidence surveys seem to be showing more signs of economic spring, but the economy is still struggling with a massive millstone round its neck, the rest of the beleaguered euro zone economy," said David Brown of New View Economics.

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