German business sentiment hit its strongest in three and a half years in October according to the Ifo economic think tank’s latest survey.
It also found an improvement in firms’ expectations for the future suggesting that a recovery in Europe’s largest economy may hold up better than expected.
The business climate index rising for the fifth month in a row helped briefly push the euro up against the dollar.
Analysts say the strong figures highlight the risk of
Germany leaving its peers behind in the upswing, with some saying it is now growing at least twice as fast as the overall euro zone economy.
Earlier this week closely-watched purchasing managers’ surveys suggested recovery momentum in the wider euro zone was fading, despite the stellar performance by the region’s biggest economy.
A healthy jobs market and improving consumer confidence mean German domestic demand is picking up and Economy Minister Rainer Bruederle said on Thursday that domestic demand would account for three quarters of growth in 2011.
He also more than doubled the government’s 2010 growth expectations to 3.4 percent this year and predicted growth would slow to a still firm 1.8 percent next year.