German business confidence rose unexpectedly in January to match November’s record high despite the political impasse over forming a government in Berlin and the effects of a stronger euro.
The Munich-based Ifo economic institute said its business climate index, based on a monthly survey of companies, rose to 117.6 from 117.2 in December. A consumer confidence survey yesterday added to the impression that Europe’s largest economy was firing on all cylinders. GfK, a market research firm, said shopper sentiment had risen to its highest level since 2001, buoyed by record low unemployment and expectations of wage increases.
The January business reading beat analyst expectations for a dip to 117.1. “The German economy made a dynamic start to the year,” Clemens Fuest, the Ifo chief, said. The improvement was driven by managers taking a stronger view of the business situation. Business expectations for the next six months were slightly scaled back while remaining at a high level.
The medium-term outlook was attributed to a higher oil price and the stronger euro exchange rate making exports to countries outside the single currency zone more expensive.
Alexander Krueger, an economist at Bankhaus Lampe, said: “The political impasse regarding the formation of a government is apparently perceived by companies as hardly disturbing.”