Thursday, August 26, 2010

Business confidence hits pre-crisis high

German business confidence has regained levels not seen since before the global financial crisis, the Ifo economic institute said on Wednesday in the latest sign of strength in Europe's biggest economy.

"The German economy remains robust," Ifo president Hans-Werner Sinn said in a statement as the closely watched climate index climbed to 106.7 points from 106.2 points in July, marking the highest level since June 2007.

Analysts polled by Dow Jones Newswires had forecast on average a slight decline to 106 points following a record jump by the poll of 4.4 points in July.

The latest improvement fortified the sharp increase seen a month earlier, the biggest increase since German reunification, Ifo said.

The survey was released a day after official data confirmed German output grew by 2.2 percent in the second quarter from the previous three-month period, the biggest quarterly increase since east and west Germany were reunified in October 1990.

The German central bank and most economists now forecast full-year growth of at least 3.0 percent, compared with weaker activity elsewhere in the 16-nation eurozone, Japan and the United States.

"In contrast to sentiment indices in other countries, the Ifo survey has remained at an elevated level, suggesting above-trend GDP (gross domestic product) growth in Germany - growth which is still supported by a favourable labour market situation," Barclays Capital economist Thorsten Polleit said.

German business sentiment has now reached its highest level since before the global financial system was slammed by a meltdown of the US market for high risk mortgages in mid-2007.

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