German Ifo hits record high in October

German business confidence unexpectedly improved in October, according to a widely-followed survey released on Wednesday.

The Ifo business climate index rose to an all-time high of 116.7 from 115.3 in September, beating expectations for a reading of 115.2.

Meanwhile, the current assessment index came in at 124.8 from 123.7, ahead of expectations of 123.5, while the expectations index printed at 109.1 in October compared to 107.5 and forecasts for a reading of 107.3.

Ifo chief Clemens Fuest said: “Companies are very optimistic about the months ahead. They also upwardly revised their very favourable assessments of the current business situation.

"Germany's economy is powering ahead."

Capital Economics economist Jessica Hinds said: "October’s rise in German Ifo business sentiment to a new record high underscores the positive outlook for the eurozone’s largest economy.

"Admittedly, we don’t think German GDP growth will be that strong. After all, the Ifo has consistently overstated economic growth in recent quarters and the composite PMI for the same month fell. Nonetheless, the big picture is that both the Ifo and the PMI are painting a positive picture of the economy. Overall, they suggest that German businesses are not worried by either the ongoing coalition negotiations or the appreciation of the euro over recent months. Accordingly, we still think that annual GDP growth will be around 2.3% this year, the strongest since 2011."