German business confidence unexpectedly rose for the first time in five months in November, defying Europe’s worsening debt crisis.
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 yesterday 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 report before retreating to trade little changed at $1.3375 at 11:40 a.m. in Frankfurt. The benchmark DAX Share Index (DAX) gained 1.3 percent. Ifo said its gauge of the current situation held steady at 116.7 while an index of executives’ expectations climbed to 97.3 from 97.
‘Robust Condition’
Hans-Peter Keitel, the president of Germany’s BDI industry federation, said on Nov. 21 that a recession is unlikely as industrial companies are in “robust condition” with “well filled” order books.
Adidas AG Chief Executive Officer Herbert Hainer said on Nov. 3 that Europe’s debt crisis won’t halt growth in the sporting-goods market and forecast higher earnings next year as the company expands in Russia and China.
The German economy expanded 0.5 percent in the third quarter, more than the 0.3 percent achieved in the second, with growth driven almost solely by domestic demand, a final reading from the Federal Statistics Office showed today.
U.K. economic growth also accelerated in the third quarter as stock-building and government spending offset weak consumer spending and business investment, the Office for National Statistics confirmed today in London.
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