THE TAKEAWAY: IFO survey better than expected -> Business confidence increased to 8-month high -> Euro jumps intraday
German business confidence rose unexpectedly in March, the widely read IFO survey out of Munich revealed today. The survey’s business confidence component came in at an 8-month high of 109.8, versus the expected 109.6, and the previous business confidence figure was revised up to 109.7. The current assessment and business expectations components saw similar gains, fueling a spike in the Euro intraday.
The single currency jumped 25 points after the release as investors took encouragement in the improving economic outlook. Although German manufacturing has contracted recently as consumer confidence erodes, today’s positive release was seen as a sign that investors have taken a positive view of recent European efforts to resolve the ongoing debt crisis.
The IFO's economist Wohlrabe said the gains in the IFO survey show that a mini-recession in Germany can be avoided.