The Munich-based Ifo economic institute reported on Monday that its closely watched business confidence indicator rose to a higher-than-forecast 106.7 points this month, from a December reading of 105.5.
The Ifo is now at its highest level since July, with plunging oil prices, the weaker euro and the build-up to European Central Bank’s new stimulus measures having boosted optimism in German boardrooms.
Analysts had expected the indicator, which is based on a monthly survey of about 7,000 companies, to rise to 106.5 points.
“The German economy made a good start to the year,” said Ifo President Hans-Werner Sinn releasing the January survey.
“Companies were far more satisfied with their current business situation and the majority was also optimistic about the business outlook,” he said, noting that the indicator pointed to a pickup across most business sectors.
This included the key manufacturing sector, with the mood among manufacturers lifted by the weak euro, which has been sliding in recent weeks amid the build-up to last week’s ECB announcement of a more-than 1-trillion-euro (1.13-trillion-dollar) stimulus plan.
Business leaders were surveyed by the Ifo institute as speculation grew ahead of last Thursday’s ECB announcement.
“The signs of a recovery in the making have become even stronger and more unambiguous today,” said Andreas Rees, chief German economist with Italy’s UniCredit bank.
While the gauge measuring expectations six months down the track climbed to 102 points this month, from 101.1 points in December, the index measuring industry’s assessment of current business conditions rose to 111.7 from 109.8.
The rise in the Ifo indicator is also in line with other leading Germany economic sentiment surveys.
German investor confidence surged to an 11-month high in January according to a survey released last week by the Mannheim-based ZEW institute.