German business morale up

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BERLIN (Reuters) – German business confidence rose unexpectedly in January to match November’s record high, a survey showed yesterday, suggesting that Europe’s biggest economy continued to fire on all cylinders at the beginning of 2018 despite a stronger euro.

The surprisingly bullish figures, released by the Ifo economic institute, bode well for future growth and give Chancellor Angela Merkel a tailwind as she tries to form a coalition government with the centre-left Social Democrats.

The Munich-based Ifo economic institute said its business climate index, based on a monthly survey of some 7,000 firms, rose to 117.6 in January from 117.2 in December.

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The January reading beat expectations in a Reuters consensus forecast of analysts who had forecast a dip to 117.1.

“The German economy made a dynamic start to the year,” Ifo chief Clemens Fuest said in a statement.

The overall improvement was driven by managers taking a stronger view of their current business situation, with the respective sub-index hitting a record high, the survey showed.

Business expectations for the next six months were slightly scaled back, while remaining at an overall high level. Unicredit analyst Andreas Rees attributed the drop to the higher oil price and the stronger euro exchange rate, which makes exports to countries outside the single currency bloc more expensive.

A sector breakdown of the Ifo figures showed the main support came from manufacturing – where the mood among managers hit a record high – and wholesaling, while sentiment deteriorated in construction and retailing.

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