German business confidence rose unexpectedly for the first time in five months in November, defying Europe's worsening debt crisis and casting a surprising ray of sunshine on what's been painted as a gloomy economic picture.
The Munich-based Ifo institute’s business climate index, based on a survey of 7,000 executives, increased to 106.6 from 106.4 in October. Economists expected a decline to 105.2, according to the median of 40 forecasts in a Bloomberg News survey.
“Although downside risks certainly remain, doomsday is not around the corner,” said Andreas Rees, chief German economist at UniCredit Markets and Investment Banking in Munich. “A recession, and especially a deep and nasty one, is not in the pipeline.”
German unemployment remains near a two-decade low, supporting consumer spending and helping to offset the impact of waning demand for the country’s exports across the 17-nation euro region. Still, concerns that Europe’s largest economy is not immune to the escalating debt crisis were stoked this week, when Germany failed to get bids for 35 percent of the 10-year bonds it offered for sale.
The euro rose about a quarter of a cent after Ifo’s Thanksgiving Day report, before retreating to trade little changed at $1.3375 at 11:40 a.m. in Frankfurt. The benchmark DAX Share Index gained 1.3 percent. Ifo said its gauge of the current financial situation held steady at 116.7 while an index of executives’ expectations climbed to 97.3 from 97.—Paul Duchene
