German corporate sentiment unexpectedly rose in February, a survey showed today.
The Munich-based Ifo economic research institute said its business climate index, based on a monthly poll of around 7,000 firms, rose to 104.1 from 103.4 in January. A Reuters poll of economists had pointed to a fall to 102.8.
Ifo
The euro rose against the dollar, and Bund futures dropped after the release of the stronger-than-expected data, which showed a rise in the index for the second month running.
An Ifo component index on retailing rose to 1.3 from to 17.5 in January.
German households have been reluctant to raise their spending despite falling unemployment, with many worried that welfare reforms mean they will have to provide more for themselves in old age, and increasing their savings rate as a result.
Private consumption subtracted 0.4 percentage points from German GDP in the fourth quarter, but the Ifo report suggested that weakness may be overcome in 2008, amid lower unemployment and higher wages.
The rise in German sentiment contrasted with a bleaker picture in Italy, where business morale fell for the fourth month running in February to its lowest level in 28 months as firms reported a fall in orders.
In the Netherlands, consumer confidence fell to its lowest level in two years in February.