German IFO Rises for Second Month in December
German business sentiment climbed for the second month running in December as firms become more confident about their business outlook, confirming signs that Europe's biggest economy is likely to bounce back quickly from a year-end slowdown.
The Munich-based Ifo think tank said on Wednesday its business climate index, based on a monthly survey of some 7,000 firms, rose to 102.4 in December from 101.4 in November.
That beat the median forecast in a Reuters poll of 40 economists for the index to climb to 102.0, with expectations ranging from 101.0 to 105.3. The euro climbed against the dollar after the news.
An abating of the euro zone debt crisis has allowed German companies to regain confidence, and expectations for exports have improved, Ifo economist Klaus Wohlrabe told Reuters.
"There is a certain calming down at the end of the year. Export expectations have risen. Companies are growing confident again," Wohlrabe said, adding that business was going well in the run-up to Christmas.
"Christmas business was really good. The climate in retail has deteriorated slightly but that is mainly due to car sales. That is not dramatic," he said, adding electronics and sports goods had been selling well.
Wohlrabe said he expected the German economy to contract by 0.3 percent in the fourth quarter of this year but to return to slight growth in the first quarter.