Germany’s Ifo index of business confidence rises in January by more than expected

FRANKFURT – A key index of German business confidence rose by more than expected in January, adding to signs that Europe’s biggest economy could be gathering speed.

The Munich-based Ifo institute’s survey of business executives rose to 110.6 points from 109.5 in December. Market analysts had expected an increase to 110.0.

“The Germany economy made a promising start to the New Year,” said Hans-Werner Sinn, the institute’s head.

The Ifo is one of several surveys that have indicated the German economy will have a better year in 2014 after growing by only 0.4 per cent last year.

Economists expect growth will be helped by a recovery in the economies of the United States and several of Germany’s EU trading partners, such as Spain, which is slowly recovering from a debt crisis.

Jonathan Loynes, chief European economist at Capital Economics in London, said that the survey showed “decent momentum” for Germany.

He cautioned that the Ifo and other surveys “have tended to over-do the actual strength of the economy over recent quarters.” Still, he said, the January survey reading supported a forecast of growth of about 1.5 per cent this year.