As global trade picks up, German business optimism soars

German momentum will carry into the final quarter

November 24, 2017, Reporter : BNN, Reader : 714

BERLIN, Germany - In an unexpected record, Germany’s business confidence set a new record high in November. 

According to the Ifo institute, its index for Germany climbed to 117.5 from a revised 116.8, beating economists’ estimates for the gauge to remain unchanged.

This year, Europe’s largest economy has soared as global trade picks up and the euro area’s revival becomes more broad-based. 

Predictions made by the Bundesbank, German momentum will carry into the final quarter, and economists foresee the fastest expansion since 2011.

Ifo’s gauge of expectations rose to 111.0 from a revised 109.2, though a measure of current economic conditions dropped to 124.4 from 124.8.

According to the Ifo, 90 percent of the responses to its survey were submitted before that turn of events.

Carsten Brzeski, chief economist at ING-Diba AG in Frankfurt said, “The current situation in Germany is an excellent illustration of a phenomenon which has characterized the entire eurozone throughout the year: buoyant confidence and strong economic growth goes hand in hand with political uncertainty and instability. This dichotomy can easily continue in 2018.”

Reports noted that in the wider euro area, economic growth is powering ahead, with the European Central Bank claiming credit for the most synchronized upswing since the single currency was founded almost two decades ago. 

A purchasing managers index shows that private-sector activity accelerated in the month of November after new orders surged the most in more than 6-1/2 years/

Further, companies are said to have added jobs at one of the fastest rates in at least two decades.

According to the ECB, its extraordinary monetary stimulus is driving growth, but policymakers are considering plans for gradually withdrawing some of their support.