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Last Updated: Thursday, 23 February 2006, 10:21 GMT
German economic confidence rises
Worker at VW factory in Dresden
The German economy appears to be revving ahead
German business confidence has risen to its highest level in more than 14 years, a much-watched survey has found.

With sentiment rising across both manufacturing and service, the study by research institute Ifo has now seen increases for three months in a row.

Its February finding came as a separate poll by fellow research firm GfK found that German consumer confidence was also rising, in what is World Cup year.

The ongoing German economic recovery is expected to quicken in 2006.

Improving outlooks

Ifo's monthly business confidence index of 7,000 firms rose to 103.3 in February, from an upward revised 101.8 in January, beating market expectations.

It is not just economic spring returning to the German recovery, but it looks like full-blown summer has arrived for German business confidence
Economist David Brown

The index, which is calculated from the balance of positive and negative feedback, is now at its highest level since October 1991.

GfK's study found that German households were becoming more confident that the economy was continuing to pick up and that their personal financial situations would improve.

"Despite the still tight situation on the labour market, stagnant retail sales during the Christmas period and stubbornly high energy prices, consumer sentiment remained largely stable in February," said GfK.

Analysts said that the two surveys could give the European Central Bank greater scope for raising eurozone interest rates in coming months.

"It is not just economic spring returning to the German recovery, but it looks like full-blown summer has arrived for German business confidence," said economist David Brown of Bear Stearns.


SEE ALSO:
Germany's economy treading water
14 Feb 06 |  Business
German trade surplus hits record
08 Feb 06 |  Business
World Cup lifts German consumers
27 Jan 06 |  Business
Slower growth for Germany in 2005
12 Jan 06 |  Business
Surprise fall in German jobless
03 Jan 06 |  Business
German economy 'to grow quicker'
19 Dec 05 |  Business


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