2017.03.2706:34:00UTC+00German Business Confidence Strongest Since Mid-2011

German business sentiment strengthened to a 68-month high in March as economic impetus pushed up companies' assessment of the current assessment and outlook.

The business confidence index rose to 112.3 in March from a revised 111.1 in February, survey data from the Munich-based Ifo institute revealed Monday.

This was the highest reading since July 2011. Economists had forecast the indicator to fall to 110.8 from February's originally estimated 111.0.

The current conditions index came in at 119.3 versus 118.4 a month ago. The score was also well above the expected score of 117.9.

Likewise, the expectations index climbed to 105.7 from a revised 104.2 in February. The reading was forecast to rise to 104.3.

Driven by more optimistic expectations among manufacturers, business sentiment rose to its highest level since July 2011. The improvement was largely driven by a renewed upturn in demand.

On the other hand, the business climate index in wholesaling deteriorated in March after a sharp increase. Assessments of both the current business situation and expectations were scaled back.

In retailing, the indicator improved as retailers assessed their current situation far more favorably, while the short-term business outlook clouded over slightly.

The business climate index in the construction sector strengthened in March as their assessment of the current business situation reached the highest level since 1991.

Even though the German economy could still use some new structural reforms, today's Ifo index illustrates that low interest rates, a relatively weak euro and continued government consumption should once again extend the current golden cycle, Carsten Brzeski, an ING Bank economist, said.

Both the Ifo and PMI survey point to a stronger quarterly gain in GDP in the first quarter than fourth quarter's 0.4 percent, Jennifer McKeown, chief European economist at Capital Economics, said.