GERMAN BUSINESS confidence recovered further this month but fell short of signalling a dramatic rebound in Europe’s biggest economy.

The Munich-based Ifo institute yesterday reported its “business climate” index – watched as an indicator of growth trends – had risen for the second month running to the highest since November. That pointed to a significant improvement in prospects since the first quarter of the year when German gross domestic product contracted by 3.8 per cent.

The Ifo index showed “that the German economy is no longer in freefall, and is now on its landing approach”, said Jörg Krämer, chief economist at Commerzbank in Frankfurt.

However, the index’s rise, from 83.7 in April to 84.2, was smaller than expected, suggesting some recent optimism about euro zone economic prospects had been overdone.

Pushing the index higher were businesses’ expectations about the next six months – which were the most optimistic since September. – (Copyright The Financial Times Limited 2009)