German business morale rose to its strongest level since 1991 in December, buoyed by an increasingly strong domestic sector that is helping the economy power ahead of weaker euro zone peers.
The Munich-based Ifo think tank said today its business climate index, based on a monthly survey of some 7,000 firms, rose to 109.9 from 109.3 in November. The rise was the seventh in a row and surpassed expectations for a fall to 109.1.
The reading amplified the positive message from other German data released this week, showing Europe's largest economy is leaving behind those weaker members of the euro zone struggling with a debt crisis.
Ifo indices on current conditions and expectations both rose. The expectations index hit a record high, suggesting the recovery will power on into the New Year.
Another survey released yesterday showed Germany's private sector grew at the fastest rate in 4.5 years in December, when investor sentiment also rose on a brightened outlook for exports and domestic demand.
Rising domestic investment and private consumption will help drive the German economy in 2011, Ifo said earlier this week, raising its forecasts for economic growth this year and next to 3.7 per cent and 2.4 per cent respectively.
Other economic institutes have this week also raised their growth forecasts for Germany as the recovery powers ahead.
Their upbeat assessments reflect growing evidence that Germany's domestic economy is contributing more to the recovery as households' confidence grows. Consumer morale rose going into December to its highest since October 2007.
Ifo economist Klaus Abberger said Germany's retail sector was also experiencing strong Christmas trade.
"Business trade went well. The last week however is extremely important," he said.
Reuters
