German business confidence up

FRANKFURT: German business sentiment rose to the strongest level in almost six years in a sign that the momentum in Europe’s largest economy is set to continue.


The Munich-based Ifo institute’s business climate index increased to 112.9 in April from a revised 112.4 in March. That compares with a median estimate of 112.4 in a Bloomberg survey of economists.


The economy expanded at the fastest pace in five years in 2016, and reports since then have underlined expectations for a continued robust performance.


The nation’s strength is key to the euro area’s recovery as the European Central Bank (ECB), which meets to set policy on Thursday, edges toward a decision on when to unwind its extraordinary stimulus.


“This may strengthen calls for monetary policy normalisation from Germany,” Jennifer McKeown, chief European economist at Capital Economics in London, said in a note.


“But with underlying inflation still weak in the eurozone as a whole, we doubt that the ECB will be swayed.”


Ifo’s measure of current economic conditions in Germany improved to 121.1 in April from a revised 119.5. A gauge of expectations fell to 105.2 from 105.7.


The Bundesbank said in its monthly report that sentiment in German manufacturing is “extraordinarily optimistic.”


Still, a report last Friday showed private-sector output decelerated more than expected in April amid a softer expansion in the service sector. — Bloomberg (TheStar)