German business confidence hits record high in February: Ifo

Tuesday, 22 February 2011 00:05 - - {{hitsCtrl.values.hits}}

FRANKFURT, (AFP) - German business confidence has hit its third straight record high, the Ifo institute said Monday, while a eurozone measure also pointed to fresh momentum for a sustained recovery, analysts said.

The German Ifo index reached a record of 111.2 points in February, Ifo data showed, an indication that “the upswing in the German economy is robust,” president Hans-Werner Sinn said in a statement.

It was the index’s ninth consecutive increase and the institute’s business expectations index also set a new record at 107.9 points.

Analysts polled by Dow Jones Newswires had expected the main index for Germany, Europe’s biggest economy, to remain at the January level of 110.3 points and had forecast a dip in the expectations index to 107.6 points.

For the 17-nation eurozone, manufacturing and service activity in February hit levels last seen in July 2006, another closely-watched survey showed.

The purchasing manager’s index (PMI) compiled by the research group Markit jumped from 57.0 points to 58.4 points, following a sharp pick-up in both the manufacturing and service sector indices. The PMI and Ifo indicators provided “further evidence that the eurozone and German economic recoveries may have regained momentum at the start of the year,” Capital Economics European economist Ben May said. In Germany, Ifo’s survey of some 7,000 companies found that in the core manufacturing sector, the climate index rose though expectations saw “a slight downward adjustment,” the statement said.

Sentiment in the retail sector had “cooled off somewhat,” with retailers “no longer quite as satisfied with their present business situation as before,” it added.

For ING senior economist Carsten Brzeski, the German economy was now “reaching for the stars.

“Many factors seem to resemble the last episode of strong German growth between 2006 and 2008,” he noted.