German business confidence hits highest level since May 2014

German business confidence rose to its highest level since May 2014 in September, according to a widely-followed survey.

The Ifo Institute’s business climate index rose to 109.5 in September from 106.3 the month before, beating expectations for a reading of 106.4.

The current assessment index increased to 114.7 from 112.9, surpassing expectations of 113.0, while the expectations index pushed up to 104.5 from 100.1. Economists had been expecting a reading of 100.2.

Jennifer Mckeown, senior European economist at Capital Economics, said: “September’s rebound in the German Ifo Business Climate Indicator offers hope that the economy remains in good health after the more negative signs from other surveys and hard data.”

She added that the index is consistent with a further rise in GDP growth from the second quarter’s 1.7% to around 2%.

“The positive message from the Ifo survey is at odds with the latest evidence from the PMI, which fell markedly in September, and also with the sharp fall in industrial production in July.”