German firms are more confident about their future business prospects than at any stage since 1992, and increasingly keen to invest more, a survey by the chambers of industry and commerce (DIHK) showed today.
The DIHK said prospects for hiring staff among firms are better than they have been for five years, though the euro's strength against the dollar could pose problems for the country's key export sector, which has powered growth for years.
"The overall economy has taken a big stride forward," the DIHK said in a statement. "The economy will reach a new high in the coming months -- according to firms' expectations."
The DIHK, whose study was based on a poll of about 21,000 firms, said their assessment of current conditions had reached its most positive level since February 1992, with business expectations the highest since autumn of that year. Companies' investment plans were at their most positive level since the group's February 1991 survey, the DIHK said.
The DIHK noted that the European Central Bank, which last week raised its main lending rate to 2.75 per cent, still offered firms favourable financing conditions.
The DIHK stuck to its forecast for Europe's largest economy to expand by two per cent this year, which would be its best performance since 2000. Separately today, the DIW economic think tank forecast the economy would grow by 0.6 per cent during the second quarter, after posting quarterly expansion of 0.4 per cent in the first - partly thanks to a rebound in construction activity.
Compared with the DIHK's last survey published in February, optimism in the construction sector showed the biggest leap forward, with more builders now upbeat about their prospects than pessimistic for the first time in 14 years.
In part, this greater optimism was thanks to work stemming from the soccer World Cup, which began on Friday, the DIHK said.
DIHK managing director Martin Wansleben predicted that German unemployment was likely to fall by around 300,000 in total this year, but noted this would be largely due to an increase in low paid jobs and statistical effects. Companies' hiring plans were still negative on balance, the DIHK said, but only just.
The DIHK said the euro, which has risen strongly against the dollar this year, was not hindering German exporters yet. "But it's still too early to sound the all-clear on this front: the euro's high foreign exchange value is already putting pressure on earnings, which could have a negative effect on sales in the long term if it appreciates further," it said.