German business confidence brightens more than expected

December 19, 2022 GMT

BERLIN (AP) — German business confidence improved more than expected in December as managers in Europe’s biggest economy took a brighter view of both their current situation and the outlook for the next six months, a closely watched survey showed Monday.

The Ifo institute said its monthly confidence index rose to 88.6 points from 86.4 in November. Economists had expected an increase to 87.5.

“German business is entering the holiday season with a sense of hope,” Ifo said in a statement. The December improvement in overall sentiment was the third in a row, but it marked the first time that businesses have been more positive about their current situation after six months of increasing pessimism.

German inflation has slipped back slightly from its peak, declining to 10% in November from 10.4% the previous month, although galloping prices remain a major headache for the economy.

The German economy grew 0.4% in the July-September period compared with the previous quarter thanks to consumer spending. But it is still expected to shrink in the current fourth quarter and the first three months of next year.

Germany has worked to prevent a potential energy crunch after the Russian invasion of Ukraine and the end of gas supplies from Russia. It has taken measures including reactivating old oil- and coal-fired power stations, extending the life of the country’s last nuclear power plants by a few months, and building liquefied natural gas terminals — the first of which was inaugurated on Saturday.