The business climate in Germany in August reached its highest level in over three years, an unexpected improvement which supports the argument for a continued recovery at a pace that slowed slightly in the first economy in Europe.
The monthly index calculated by Munich-based Ifo Institute rose to 106.7 against 106.2 in July, while economists and analysts polled by Reuters had forecast decline to 105.7.Their estimates ranged from 103.8 to 107.5.
This index is calculated on the basis of the results of a survey of 7,000 companies.
"The German economy is evolving to a higher summer stable," Ifo said in a statement.
The euro briefly extended its rise against the dollar after the publication of the index, amount to over U.S. $ 1.2720 while the German government bonds are expanding their decline.
The component of the current situation grew 108.2 106.8 cons (as confirmed) last month and 107.4 expected.
The expectations component has however declined to 105.2 from 105.6 (revised from 105.5) in July.Analysts had expected a sharper drop, however, to 104.4.
Klaus Abberger, an economist at Ifo, told Reuters that German growth would continue in the second half, but at a slower pace compared to the first.
The surge in exports and a recovery in consumer spending helped the German economy recorded a growth of 2.2% in the second quarter, the most sustained since the reunification.
"The way things are going right now is amazing but great.It's hard to imagine being able to do even better, "commented Andreas Scheuerle, Deka Bank.
"The potential for further increase of the index of business climate begins to diminish."
Klaus Abberger said to expect a slight growth of domestic consumption over the whole year.