Berlin, Germany (4E) – Business confidence in Germany jumped to a six-month high in August after the nation’s biggest trading partner, the euro zone, finally returned to growth after several quarters of recession.
The Ifo institute’s business confidence index, based on the opinion of 7,000 executives, increased for the fourth straight month to 107.5 in August from 106.2 in the previous month, and the highest reading since April last year.
The latest result beats most expectations, and comes after a survey that indicates improving sentiment among German purchasing executives, showing business activity in August rose to its fastest pace in the last seven months.
In the second quarter, Germany’s gross domestic product (GDP) climbed 0.7 percent, surpassing estimates and helping the common currency bloc emerge from six quarters of economic contraction. The growth was spurred by private consumption and included the first rise in investment for plant and machinery since 2011, a sign of a sustained recovery.
The Bundesbank forecasts GDP growth in Germany to rise 0.3 percent in 2013 and gain 1.5 percent in 2014. In the first three months of this year, economic growth stagnated.
More and more German companies believe that the recovery in the euro area is starting to spread to some struggling southern European economies. Confidence is also lifted by signs that China – Germany’s top destination for its manufactured machinery and equipment – is bouncing back to growth after losing ground in the first half of the year.