German Business Confidence Unexpectedly Rebounds From Record Low In Nov.
German business confidence unexpectedly halted its drop for a seventh straight month in November, rebounding from the lowest level in 2 1/2 years in October, giving hopes there could be improvement in the fourth quarter after the progress in manufacturing and as Greek concerns eased.
Ifo institute said its business climate indicator, based on a survey of 7,000 executives, rebounded from 100 in October to 101.4 this month, beating forecasts of hitting a three-year low of 99.5.
German manufacturing edged up to 46.8 in November from 46.0 the previous month, where in the euro area the manufacturing sector showed an ease in contraction in November to 46.2 from 45.4 in October.
On the other hand, there are mounting expectations that Greece is about to getting an approval for its next aid tranche after Chancellor Angela Merkel said on Wednesday an agreement to release aid to Athens was still possible next Monday.
Another report released today showed that in France, Germany's main trading partner, business confidence increased from the lowest in more than three years this month.
However, the debt crisis is still affecting Germany's exports which fell in September at the fastest pace since late last year, where Germany's third quarter GDP (final reading) released today showed that overseas sales plummeted to 1.4% in the third quarter from a revised of 3.3% in the three months through June.
A report released earlier today confirmed that the German economy expanded 0.2% in the three months ended September, yet the economy is predicted to face a drop in the final months of the year as euro-area and global demand for its exports weakens, according to the Bundesbank monthly report released on Monday. In contrast, the European Commission said Germany will expand 0.8% this year.
The ECB left its benchmark interest rate unchanged at 0.50% this month, where the ECB bulletin for the monetary decision mentioned that economic activity in the euro area is expected to remain weak, especially in the second half of 2012, as all indicators refer to this, while in 2013 growth momentum is likely to remain anemic since the risks surrounding the economic outlook for the euro area remain on the downside.
The ECB cut its growth forecasts as it now foresees a contraction of 0.5% this year, which higher than the 0.3% contraction anticipated three months ago, while lowered growth forecasts for 2013 to 0.3% from prior estimates of 0.6%.
Ifo’s measure of executives’ expectations soared to 95.2 from 93.2, while a gauge of the current situation climbed to 108.1 from a revised of 107.2.
As of 09:20 GMT, the euro pared some of its earlier gains versus the U.S. dollar as the pair retreated from a high of 1.2912 to trade around 1.2893, after opening today's trades around 1.2882.