German business confidence in surprise surge

German business confidence unexpectedly rose for the first time in five months in November, data showed on Thursday.

The Munich-based Ifo institute’s business climate index, based on a survey of 7,000 executives, increased to 106.6 from 106.4 in October, ending four months of falls.

Economists had forecast the index to fall to 105.1.

The Munich-based institute's current conditions index was unchanged at 116.7, while the expectations index, which measures attitudes toward business prospects over the next six months, rose to 97.3 from 97.0. "The German economy is still performing relatively well despite the international turmoil," said Ifo President Hans-Werner Sinn. The index is based on around 7,000 monthly survey responses from frims in the manufacturing, construction, wholesale and retail sectors, the institute said.

While German unemployment remains near a two-decade low, supporting consumer spending, the Bundesbank this week slashed its growth forecast for 2012 to between 0.5%percent and 1% from 1.8% citing waning demand across the 17- nation euro region.

Concerns that Europe’s largest economy is not immune to the escalating debt crisis were stoked yesterday when Germany failed to get bids for 35% of the 10-year bonds it offered for sale.

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