German business sentiment rose in December, defying expectations for a decline and underscoring the resilience of Europe’s dominant economy in the face of the euro zone’s debt crisis.
The Munich-based think tank Ifo said that its business climate index, based on a monthly survey of some 7,000 companies, rose to 107.2 in December from 106.6 in November, its biggest monthly rise since February.
It was the second increase in a row after an equally surprising gain in November. Economists surveyed by Reuters had forecast a drop to 106.1.
Analysts welcomed the rise but took care not to overplay its significance, particularly in the wake of recent downbeat German export and manufacturing data, and amid continuing downward revisions to 2012 economic growth forecasts.
“The small rise in the December’s Ifo index is a welcome surprise but hardly transforms the outlook for the economy,” said economist Jonathan Loynes of Capital Economics.
“All of the indices are sharply down on their summer readings. Overall, there is some encouragement here that the German economy is not currently plunging into recession, but the picture is one of very weak growth at best,” he added. – (Reuters)
