German investor confidence rises
German investor confidence rose for the first time in seven months in November as the economy, Europe’s largest, powered ahead of its euro-area neighbours.
The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict developments six months ahead, increased to 1.8 from minus 7.2 in October.
Economists expected a gain to minus 6, according to the median of 33 forecasts in a Bloomberg News survey.
Germany’s economy will expand 3.7pc this year, according to the government’s council of economic advisers. That would be fastest growth since 1991.
The performance contrasts with fellow euro-region nations such as Ireland and Greece, whose economies are contracting as their governments slash spending to rein in budget deficits.
“Germany is not really affected by the debt crisis and if anything there is confidence that it will be sorted soon,” said Aline Schuiling, an economist at ABN Amro Bank NV in Amsterdam.
“The outlook for the global economy has improved in recent weeks and that bodes really well for Germany.”
ZEW said its gauge of the current situation increased to 81.5 from 72.6. The euro rose after the report to $1.3612 from $1.3592 beforehand.
The benchmark DAX share index has risen 10pc in the last six weeks, unperturbed by Ireland’s worsening fiscal crisis as German companies reported higher profits.
Of the 28 companies on the DAX that have announced quarterly results since October 7, more than two thirds have beaten analyst estimates for per-share income, according to data compiled by Bloomberg.
Linde, the world’s second biggest maker of industrial gases, said on November 2 that third-quarter profit rose 50pc.
German export-oriented companies have benefitted from stronger demand from emerging economies, particularly China.
Volkswagen, Europe’s largest carmaker, said on November 12 that October sales rose more than twice as fast as the worldwide auto-market average, as demand for its VW and Audi models in the US and China surged.
The German economy grew 0.7pc in the third quarter after record expansion of 2.3pc in the second, outpacing the euro region as a whole.
Still, the sovereign-debt crisis may damp German growth by curtailing demand for its goods across the region as governments introduce austerity measures.
Germany is leading a drive to remedy Ireland’s debt woes before other countries, such as Portugal, succumb to the speculation that claimed Greece as the first victim.
After 13 straight days of price declines, Irish bonds began to rally late last week as investors bet a bailout is imminent from the European Union’s €750bn fund, which was created with help from the International Monetary Fund in May to stabilise the 16-nation euro economy.
“If May’s experience is anything to go by, Germany will actually be a beneficiary of the current Ireland/Portugal crisis,” said Carsten Brzeski, an economist at ING Group in Brussels. “It will weigh on the euro and it’ll keep interest rates low.”