German business confidence rose for a third month in July, indicating that Europe’s largest economy is recovering as the 17-nation euro region tries to shake off its longest-ever recession.
The Ifo institute’s business climate index, based on a survey of 7,000 executives, rose to 106.2 from 105.9 in June. Economists predicted an increase to 106.1, according to the median of 45 forecasts in a Bloomberg News survey.
German unemployment unexpectedly declined in June and the nation led the first expansion in euro-area manufacturing in two years in July. The Bundesbank said this week that the domestic economy grew “strongly” in the second quarter, while warning of signs of a summer slowdown.
“There might be one or more potholes on the road but in general the German economy is moving in the right direction,” said Mario Gruppe, an economist at NordLB in Hanover. “For the euro area, there’s hope that the economy emerged from recession in the second quarter or at least flirted with stagnation.”
Manufacturing in the euro area, Germany’s biggest trading partner, unexpectedly expanded this month for the first time since July 2011, according to a survey of purchasing managers published yesterday by London-based Markit Economics. That lends support to European Central Bank President Mario Draghi’s prediction of an economic recovery later this year.
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