German business confidence in the key manufacturing sector reached its highest level since March 2015
Berlin - AFP
German business confidence bounced back in November as Europe's top economy shrugged off global uncertainty and the deadly jihadist assault in Paris, a leading economic think tank said Tuesday.
The Ifo institute's closely-watched business climate index rose to 109 points in November from 108.2 points in October, Ifo said in a statement, surprising analysts polled by financial services firm Factset who had expected another dip to 108.1.
"The German economy remains unaffected by growing uncertainty worldwide," Ifo president Hans-Werner Sinn said in a statement.
"Not even the Paris attacks had a negative impact on survey data."
For its survey, Ifo quizzes companies about their current business environment and the outlook for the next six months.
A sub-index measuring current business climbed to 113.4 points while the outlook sub-index rose for the third consecutive month to 104.7 points, it said.
In the key manufacturing sector, the upbeat outlook reached the highest level since March, indicating that production "will be ramped up in the months ahead".
A sub-index for the automotive sector continued to rise despite the emissions scandal at Volkswagen, Ifo said.
"German businesses showed an interesting reaction to the recent series of uncertainties and turmoil," economist Carsten Brzeski said.
"In fact, despite not so positive hard data and new uncertainties stemming from the refugee influx and latest events in Paris, German businesses remain a bunch of optimists."
-'Encouraging picture' -
Capital Economics analyst Jennifer McKeown said the survey pointed to an economy in rude health despite mounting risk factors.
"The rise in expectations is a particularly encouraging sign that neither previous evidence of a slowdown in China nor the Volkswagen scandal have dented confidence," she said.
She warned that some 80 percent of the Ifo responses were taken before November 13 so that a negative impact from the Paris attacks could still surface.
"Overall, the survey paints an encouraging picture," she said.
"But we still suspect that German growth will slow next year as recent boosts from rock bottom inflation and a weak euro fade. We have pencilled in a 1.2-percent rise in GDP to follow 1.5 percent growth this year."
The Destatis federal statistics office on Wednesday confirmed that the German economy had grown 0.3 percent in the third quarter, boosted by domestic consumption including a rise in public spending for a record influx of asylum seekers.
The latest figures suggest that Germany is no longer just an export-oriented economy, but that consumption is fast becoming a key pillar of output.
And the Ifo report comes on the back of an investor sentiment index released last week by the ZEW think tank showing a rebound in November after seven consecutive falls.
"The German economy looks to be in robust condition at the end of the year, the sub-index for the service sector is according to Ifo at an all-time high," Stuttgart-based LBBW Research said in a note.
"It remains to be seen to what extent this uptick in early indicators translates into GDP growth rates. But all-in-all, it underlines our expectation of a slight increase in economic growth in the coming year."