German business confidence edges higher

German business confidence beat expectations by rising slightly in September, reflecting the continued robustness of Europe's biggest economy amid the current financial market turbulence, the Ifo economic institute said on Sept.24.

The Ifo institute's closely-watched business climate index rose to 108.5 points this month from 108.4 points in August, beating analysts' expectations for a slight fall, Ifo said in a statement.
 
"The German economy is proving robust," said Ifo president Hans-Werner Sinn.
 
"Companies assessed their current business situation slightly less favourably than in August. However, they expressed greater optimism about future business developments."    

Ifo calculates its headline index on the basis of companies' assessments of the current business environment and the outlook for the next six months.
 
The sub-index measuring current business fell to 114.0 points, while the outlook sub-index rose to 103.3 points, the institute said.
 
Analysts welcomed the renewed rise in the Ifo barometer.
 
"The small rise ... is a modestly pleasant surprise in light of the recent softening in some other business surveys," said Capital Economics economist Jonathan Loynes.    

"But there are some reasons for caution," the expert added.
 
The Ifo survey tended to lag behind other leading sentiment indicators, which had softened in September.    
"And, of course, none of the surveys will yet have picked up the impact of the VW scandal. While the economic effects will not all be negative -- indeed, the recall work will presumably boost activity -- it would be no surprise to see sentiment in the German industrial sector fall in the next round of surveys," Loynes said.
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