German shoppers drive business morale high

BERLIN: German business confidence unexpectedly rose in June to a record high, as strong domestic consumption and robust exports combined to make company executives increasingly upbeat about the growth outlook for Europe’s largest economy.

The Munich-based Ifo economic institute said its business climate index, based on a monthly survey of some 7,000 firms, rose to 115.1 from 114.6 in May. The reading compared with a Reuters consensus forecast of 114.4.

“Sentiment among German businesses is jubilant,” Ifo chief Clemens Fuest said in a statement.

“Companies were significantly more satisfied with their current business situation this month. They also expect business to improve. Germany’s economy is performing very strongly.”

Ifo economist Klaus Wohlrabe said neither the prospect of Britain’s departure from the European Union nor the countdown to federal elections in September had affected business morale, though the election could have an impact in August.

Private consumption was a key growth driver and there was still room for expansion in exports, he said.

Growth in the economy, Europe’s largest, accelerated to 0.6 per cent quarter on quarter in the first three months of 2017.

Wohlrabe expected 0.7 per cent in the second quarter.