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Frankfurt - German business sentiment climbed to the strongest since July 2011 in a sign that the economy is sustaining its momentum.
The Munich-based Ifo institute’s business climate index rose to 112.3 in March from a revised 111.1 in February. That compares with a median estimate of 111.1 in a Bloomberg survey of economists.
The German economy expanded at the fastest pace in five years in 2016, a trend that is set to continue as the Bundesbank says recent momentum might have been understated.
Manufacturing and services output is increasing at the fastest pace in almost six years and unemployment is at a record low - factors that could contribute to stronger growth in the coming months even amid risks from political events such as U.S. economic policies, Brexit, and French elections continue to pose risks.
The Ifo report showed that a measure of current economic conditions in Germany improved to 119.3 from 118.4. A gauge of expectations increased to 105.7 from a revised 104.2.
Germany is the biggest economy in the euro area, where the European Central Bank says the recovery is firming but not strong enough to fuel self-sustaining inflation and allow for an end of extraordinary monetary support.
The European Commission will publish a gauge for economic confidence in the 19-nation currency bloc on Thursday, and the European Union’s statistics agency will release March inflation data on Friday.
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