German market business confidence has today registered at its highest level since the summer of 2007, in an outcome that has surprised many analysts and helped partially offset an otherwise shaky morning for European markets.
While general analysts predictions had suggested business confidence would fall, the IFO Business Climate Index showed a significant rise in confidence amongst German industry, rising by 0.7 percentage points from last month’s results.
It is thought that improving conditions for manufacturers and a growing internal recognition that the future outlook for the German economy will be strong have come to bear on the increase in business confidence, despite concerns from the US that stringent Germany austerity measures could impact on the growth of the Eurozone economy.
Germany, Europe’s largest economy, is often considered a bellwether for economic performance across the Eurozone, and the rise in business confidence is considered a positive step towards a full and stable recovery for the German economy.
However, while overall confidence was growing, the construction industry was one notable sector to perform badly in the survey, with results suggesting there may still be someway to go until a full and strong recovery, particularly in light of cutbacks to government capital projects which had had an inevitable impact on the fortunes of construction and related industry businesses.
The German economy posted 2.2% growth last quarter, as it continues to play a pivotal role in strengthening the Eurozone economy.