European Central Bank President Mario Draghi said last week that policy makers will add... Read More
The Ifo institute’s business climate index, based on a survey of 7,000 executives, advanced to 104.7 in November from 103.2 in October. Economists predicted a decline to 103, according to the median of 41 estimates in a Bloomberg survey.
As the euro area’s largest economy, Germany is pivotal to any sustained recovery in the currency bloc. Even so, the pace of growth remains sluggish and the Bundesbank has said the nation’s
economy will lack momentum at least until the end of the year.
“We see some stabilization but I don’t see any reason for enthusiasm,” said Jens-Oliver Niklasch, a fixed-income strategist at Landesbank Baden-Wuerttemberg in Stuttgart. “Well-known risks to the economy such as the crisis in the Ukraine haven’t really receded.”
Ifo’s measure of current conditions climbed to 110 this month from 108.4 in October, and a gauge of expectations advanced to 99.7 from 98.3.
The euro rose about a quarter of a cent on the report, after earlier trading near a two-year low against the dollar. The single currency was little changed at $1.2396 at 10:22 a.m. Frankfurt time. The DAX Index (DAX) of stocks climbed 0.5 percent.
Downside Risk
German gross domestic product increased 0.1 percent in the three months through September after a contraction in the previous quarter. While investor sentiment climbed for the first time in 11 months in November, manufacturing and services activity expanded at the slowest pace in 16 months.Thousands of German companies are seeing business hit by European Union sanctions imposed on Russia because of its involvement in the conflict in Ukraine. Zeppelin GmbH, a machinery provider, says it faces a sales decline of about 40 percent in the two eastern European countries.
The German economy is symptomatic of the muted revival in the euro area as a whole, which saw growth of 0.2 percent last quarter. ECB President Mario Draghi said last week that policy makers will add stimulus to the region if needed to boost consumer prices and spur growth. In a flurry of activity since June, the Frankfurt-based ECB has cut interest rates, offered long-term loans to banks and bought covered bonds and asset-backed securities.
“We will do what we must to raise inflation and inflation expectations as fast as possible,” Draghi said on Nov. 21.
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