Berlin: German business sentiment rose in November to its strongest level since 1991, a survey showed yesterday, highlighting a rift in the Eurozone as the bloc's largest economy leaves smaller states behind.
The Munich-based Ifo think tank said its business climate index, based on a monthly survey of some 7,000 firms, rose to 109.3 from an upwardly revised reading of 107.7 in October, confounding expectations for a slight fall.
"The numbers confirm that the German economy is in very healthy shape and that it will probably continue to grow solidly and at a rate above the euro zone average in the coming quarters," said Aline Schuiling from ABN Amro.
The euro rose after the release of the data — which beat even the highest forecast in a Reuters poll of 40 economists — before giving up its gains and falling.
With both the current conditions and the business expectations indexes in the survey surpassing the consensus view, the headline figure landed at its highest level since survey data was first collected for a reunified Germany.
Steering clear
The business expectations index, which measures the outlook six months down the road, also hit its highest reading on record, further reinforcing the impression Germany was in the clear of problems affecting some of its Eurozone partners.
"The German economy is returning much faster to its pre-crisis level than many had expected," said Carsten Brzeski, economist at ING Financial Markets.
"Amidst new financial market turmoil and sovereign debt woes in the euro zone, the German economy seems to be an island of happiness," he added.
Germany's strong recovery has helped pull the Eurozone to improved growth in recent quarters, but there are also concerns it may be leaving other struggling economies behind.
A purchasing managers' survey on Tuesday showed a strong resurgence in private sector growth in Germany and France, offset continuing stagnation in countries like Portugal, Ireland and Spain which are battling debt and banking troubles. Despite concerns that budget cutbacks across Europe next year will hamper growth, many German companies are upbeat.
Siemens profit
Earlier this month, engineering group Siemens signalled its confidence with a proposed sharp rise in dividends and a promise of profit growth driven by emerging markets.
"We have seen for the first time a growth across our product range, driven particularly by the strong growth we have seen in emerging economies," Chief Executive Peter Loescher said of Siemens' fourth quarter, which runs to September 2010.