German business confidence at 5-month high

German business conditions improved for a second straight month in July to their strongest level since February, the Ifo institute…

German business conditions improved for a second straight month in July to their strongest level since February, the Ifo institute said.

Ifo's business climate index, based on a monthly survey of around 7,000 firms, rose to 95.0 from 93.3 in June, the Munich-based economic think-tank said this morning. This took the index to a five month high.

The index result beat expectations and boosted hopes of a recovery in Europe's largest economy.

"An economic recovery has become more likely," said Ifo President Hans-Werner Sinn in a statement. "Especially the surveyed firms' expectations for the coming six months have significantly improved."

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Mr Sinn said there was now less need for the European Central Bank to reduce interest rates, although he said a cut would help the European growth.

A breakdown of the component sections of the survey showed strong improvements in the manufacturing and wholesaling sectors. However, retail sentiment declined.