German business morale improved for the fifth straight month to an eight-month high in March as firms expressed greater optimism about future developments.
The business climate index rose more-than-expected to 107.9 in March from 106.8 in February, the results of a survey by Munich-based Ifo Institute showed Wednesday. This was the highest score since July 2014 when the reading was 108. It was forecast to rise to 107.3.
The survey suggests that the recovery in Germany continued in the first quarter as firms shrugged off fears over Greece and the weaker euro started to have an effect, Jessica Hinds, a European economist at Capital Economics said.
Elsewhere, the composite business confidence in France rose to a three-year high in March, the survey conducted by statistical office Insee revealed today.
The business sentiment index came in at 96 in March, the highest since April 2012, from 94 in February. The confidence index for manufacturing, meanwhile, fell to 99 from 100 a month ago.
Julien Manceaux, an ING Bank NV economist said France is likely to take time to retrieve higher activity levels although a lot of positive factors are now in place. The economist expects growth to speed up in the second quarter but the beginning of the year is still likely to look like the three past years.
German companies were more satisfied with their current business situation, the Ifo said. As expected, the current conditions index improved to 112 from 111.3 in the prior month.
At the same time, the expectations index rose to a nine-month high of 103.9 from 102.5 in February and stayed above the expected score of 103.
The business climate for the service sector improved to 23.1 balance points from 22.8 points in February. Service providers were more satisfied with their current business situation and somewhat less optimistic about future developments.
Timo Klein, a senior German economist at IHS Global Insight said the report reinforces the impression of an increasingly encouraging near-term outlook for the German economy.
The monthly survey by Markit also signaled solid economic growth in the first quarter. The German private sector has expanded at the strongest pace in eight months in March underpinned by increased order intakes and investment.
The Bundesbank in its monthly report released Monday said there are signs of a continued vigorous upward economic movement in the second quarter.
The bank said the economy has probably grown strongly in the first quarter of 2015 after a surprisingly strong expansion at the end of 2014.
The Organization for Economic Cooperation and Development last week said the 19-nation bloc is estimated to expand 1.4 percent in 2015 and by 2 percent in 2016.
The largest euro area economy will grow 1.7 percent this year and 2.2 percent in 2016 and France is set to expand 1.1 percent in 2015 and 1.7 percent next year.
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