24 July 2010 / REUTERS, BERLIN
German business sentiment leapt by a record margin in July to reach its highest level in three years, fuelled by a World Cup buzz that boosted consumer spending in Europe’s largest economy, a survey showed on Friday.
The unexpected jump, which boosted the euro, pointed to strong economic growth in the current quarter, though if the German recovery continued to be export-led, weaker countries in the single currency zone might suffer, analysts said. The Munich-based Ifo economic think tank said its business climate index, based on a monthly survey of some 7,000 firms, rose this month to 106.2 from 101.8 in June. This lifted the indicator to its highest level since July 2007 and was way above the mid-range forecast in a Reuters poll of 42 economists for a dip to 101.6. “The German economy is in a party mood,” Ifo said. “The increase is the largest since German reunification (in 1990).” The euro reversed early declines after the data was published, rising to the day’s high of $1.2939 according to Reuters data, from around $1.2884 before the announcement and extending gains to $1.2947 by 1045 GMT. September Bund futures were six ticks higher at 128.96. The German data followed reports showing corporate sentiment in France and Italian consumer morale were unexpectedly robust in July, raising hopes for Europe’s economic outlook, although that was tempered by an unexpected drop in French consumer spending on manufactured goods in June.
