(MENAFN- The Peninsula)
AFP
Frankfurt, Germany: German business confidence rebounded in October, a closely watched survey showed Friday, snapping a four-month streak of declines and offering some rare good news for Europe's beleaguered top economy.
The Ifo institute's confidence barometer, based on a survey of around 9,000 companies, rose to 86.5 points from 84.5 points in September.
It was higher than a figure of 85.6 predicted by analysts surveyed by financial data firm FactSet.
"Sentiment among companies in Germany has improved," said Ifo president Clemens Fuest.
Businesses were both more satisfied with the current economic environment and more optimistic about the months ahead, the survey showed.
Companies in the crucial manufacturing sector were less pessimistic about the future although they viewed their current business situation as worse, it said.
"The lack of orders remains a core problem," said Fuest.
The picture brightened in the service sector and in trade but worsened in the construction sector, which has been hit hard by the sharp downturn in the country's economic fortunes.
The uptick in the index suggested the economy could be "bottoming out," said LBBW bank analyst Jens-Oliver Niklasch, while welcoming the "rare" piece of good news.
But he stressed there is "still some way to go before there is an economic turnaround. We only see some light at the end of the tunnel in 2025."
A recovery would be fuelled "above all by the easing of monetary policy," he added.
The European Central Bank has started easing interest rates this year, making its third cut this month, after hiking them to record levels to tame high inflation, offering some relief for hard-pressed eurozone businesses.
Surging inflation -- combined with higher borrowing costs -- as well as a manufacturing slowdown and weakness in key trading partners has hit export giant Germany hard over the past two years.
It was the only major advanced economy to shrink in 2023 and a hoped-for rebound has failed to take off this year.
The German government this month cut its 2024 forecast, saying it now expects the economy to shrink by 0.2 percent, a sharp downgrade from the 0.3-percent expansion previously forecast.
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