German business sentiment rose unexpectedly in September though companies now expect the pace of growth in Europe's largest economy to slow, a closely watched survey showed today.
The Munich-based Ifo think tank said its business climate index, based on a monthly survey of some 7,000 firms, rose to 106.8 from 106.7 in August.
The surprise uptick helped push the euro to session highs against the dollar and sterling, while European shares pared losses and Bund futures turned negative.
The mid-range forecast in a Reuters poll of 48 economists had been for a fall in sentiment to 106.2.
"Today's Ifo defies any double dip concerns for the German economy," said Carsten Brzeski, economist at ING Financial Markets.
Ifo economist Klaus Abberger said the survey showed that Germany's economic rebound was entering a new phase and losing some pace, with exporters somewhat sceptical over developments in the United States and China.
"Now we've finally reached the peak of the business climate index. We can see a certain expectations gap, which shows that the economic situation may soon decline," added Philipp Jaeger, an analyst at DZ Bank.
Some recent indicators have strengthened the impression that the German economic recovery is slowing after stellar growth of 2.2 per cent in the April-June period - the fastest quarterly expansion in reunified Germany.
A purchasing managers survey released yesterday showed growth in Germany's private sector slowed sharply in September. German investor morale also fell in September, dropping to its lowest since February 2009.
Reuters