Frankfurt, Germany (4E) – Confidence among German businesses climbed less-than- forecast in September amid concerns about the recovery in the euro area, the country’s largest trading partner.
The Ifo institute’s business confidence index rose for a fifth month, albeit missing economists’ estimates, to 107.7 in September from a revised reading of 107.6 in August. Economists had predicted a gain to 108.0.
Germany is helped by an unemployment rate that currently hovers at near two-decade lows and the euro zone’s emergence from a record recession in the second quarter. This strength in the economy propelled Angela Merkel’s Christian Democrats to victory in the Sept. 22 elections and secured her a third term as German Chancellor. The European Central Bank has vowed to maintain low interest rates to back what it describes a fragile recovery in the common currency bloc.
Tuesday’s result ends a series of surprisingly strong survey data for the largest economy in the Europe, including a gauge of German purchasing executives and a poll of 260 analysts and institutional investors by Germany’s think tank institute ZEW.
The monthly Ifo report, which surveys roughly 7,000 participating companies, also reported a better business outlook. Business expectations in September jumped to 104.2 from the previous month’s reading of 103.3, reaching the highest mark since February.
Optimism may be on the rise, but trade and industry data does offer not a positive picture. German exports and industrial production were unexpectedly weak at the start of the second half of 2012 as the recovery in the bloc continues to be fragile.