- Alexander Koch, an economist at UniCredit Group
The business climate in Europe's powerhouse, Germany, rose more than expected this month, underlying improving growth prospects for the struggling 17-nation economy. A report from the Munich-based institute unveiled that a gauge of business climate ticked up to 107.5 in August, up from 106.2 a month earlier and outpaced analysts' predictions of an increase to 107. Moreover, the measure of current assessment also improved, reaching 112.0, after posting a figure of 110.1 a month earlier, and beating analysts' estimates of 111.0. Additionally, Germans are expecting the situation to improve further, as the Ifo Expectations Index rose to 103.3, from 102.4 in July. While sentiment among manufacturers and wholesale businesses improved significantly, retailers are still cautious about economic outlook.
German economic output expanded 0.7% in the second quarter, recovering from winter's sluggish growth figures and pulling the 17-nation Euro area out of its longest-ever recession. The stronger-than-expected growth figures were led by private consumption and included the first increase in machinery and plant investment since 2011, cementing expectation the recovery may be sustained. Despite overall improvement, several companies are still implementing cost-cutting measures amid weak demand from European countries.
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