×

German Ifo Business Index Rises in Jan. on Upbeat Outlook

German corporate sentiment unexpectedly rose in January, a leading survey showed on Thursday, bolstering policymakers' assertions that the euro zone economy can withstand turmoil in financial markets.

The Munich-based Ifo economic research institute said its business climate index, based on a monthly poll of around 7,000 firms, rose to 103.4 after 103.0 in December. The reading surpassed all forecasts in a Reuters poll of analysts.

Ifo received some 75 percent of the responses to its survey before this week's stock market plunge, which has now reversed.

But Hans Russ, economist at the think tank, said German firms were not showing any particular signs of nervousness about the market turmoil.

UniCredit economist Andreas Rees described the Ifo report as a "very positive surprise."

"There are two conclusions: the slowdown in growth in Germany is only temporary. We have a good chance of seeing a slight acceleration in the spring. And it looks as if we have freed ourselves from the U.S. economy," Rees said.

After the release of the data, the euro came off its lows against the dollar, euro zone government bonds ticked down towards session lows and German stocks extended gains.

In further evidence that corporate Germany remains in robust health, bellwether conglomerate Siemens delivered stronger than expected first-quarter results on Thursday.

European policymakers have said in recent days that the euro zone is in better shape economically than the United States, which appears headed for recession.

"The euro zone is doubtless in a better, more secure position however there are some downward risks," European Central Bank Governing Council member Klaus Liebscher told Austria's Salzburger Nachrichten newspaper on Thursday.

A separate Ifo gauge of current conditions dipped in January to 107.9 from 108.1 the previous month. A reading of 107.2 had been forecast. The survey's expectations component, forecast to register 97.6, rose to 99.0 from 98.2 in December.