German business morale surged in April to its highest level in nearly two years, topping even the most optimistic forecast, as Europe's largest economy moved up a gear, a closely watched survey showed today.
The Munich-based Ifo think tank said its business climate index, based on a monthly survey of some 7,000 firms, rose to 101.6 from an upwardly revised 98.2 in March.
The reading was the highest since May 2008 and surpassed all forecasts in a Reuters poll of 44 economists conducted last week, in which the consensus projection was for a rise to 98.6. The highest forecast was 100.0.
The euro rose after the release of the data and the Bund future turned negative.
"Today's Ifo index adds further evidence that the pause of the German recovery around the turn of the year was nothing more than a temporary break," said Carsten Brzeski, senior economist at ING Financial Markets.
Germany exited its deepest post-war recession in the second quarter of last year but the recovery stalled through the winter when harsh weather disrupted business activity - particularly in the construction sector.
An Ifo expectations index rose to 104.0 from 102.0 in March. A current conditions index surged to 99.3 from 94.5.
"The German economy has shifted into a higher gear," Ifo said in a statement.
Other recent economic indicators have suggested the economy is picking up steam again, with business sentiment surging in March to its highest level since June 2008. [ID:nLDE62N0XM]
German manufacturing orders held steady from the prior month in February but an upward revision to the January figure - to a rise of 5.1 per cent - showed a recovery in the economy's key industrial base is intact.
The Bundesbank said on Monday the economy is on track for a solid rebound in the second quarter.
In another sign of economic recovery, German carmaker Volkswagen on Wednesday revealed first-quarter operating profit nearly tripled.
Reuters