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German business confidence rose for a sixth month in September to reach a 12-month high, suggesting that the economy would continue its growth after exiting recession in the second quarter.
The business climate for the German industry and trade rose to 91.3 in September from 90.5 in August, the Munich-based Ifo Institute for Economic Research said Thursday. But, it missed forecasts for a reading of 92. Ifo's current conditions index climbed to 87 from August's 86.2 and the expectations index rose to 95.7 from 95.
"By far the greater number of firms still assesses the business situation as poor. Only with regard to the six-month business outlook is there now nearly a balance between pessimists and optimists," the think tank said. "In light of the catastrophic developments over the past twelve months, this is good news."
Business climate indicator has recovered somewhat in the manufacturing sector, and rose in the wholesale and retail sectors. However, it remained clouded for the construction sector.
The latest report comes ahead of the 17th federal election on September 27. Continuing increase in the economic sentiment, though slower, is expected to work in favor of German Chancellor Angela Merkel, who is seeking a second term. Her government has poured billions of euros to shore up the recession-hit economy. As a result of the public spending and loose monetary policy, the biggest Eurozone economy recovered in the second quarter by growing 0.3% compared to the first.
Commerzbank analyst Simon Junker said Ifo survey results support the firm's forecast for a 0.8% growth in Germany in the third quarter compared to the second. However, the analyst noted that in the course of the coming year, the Ifo business climate should also be dampened again, when the global economy is likely to lose momentum due to the after-effects of the global debt bubble bursting.
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