German Business Optimism Rallies in April despite Ukraine Tensions

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German Business Optimism Rallies in April despite Ukraine TensionsGerman business optimism surprisingly rose in April as the country continues to lead recovery in the euro zone against the backdrop of the Ukraine tensions.

The business climate index, which is measured by the Ifo Institute’s poll of 7,000 executives, rose to 111.2 in April from 110.7 the previous month. Economists in a Bloomberg survey had expected the index to edge lower to 110.4.

“The outlook for the economy remains bright on a general basis, and we don’t see movements that could immediately reverse sentiment,” Alexander Koch, a Zurich-based economist at Raiffeisen Schweiz told Bloomberg. “But there are risks correlated with rising trade uncertainty with Russia because of the Ukraine crisis, and partly to slower dynamics in emerging markets.”

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Thursday’s report followed another one released yesterday by Markit Economics that indicated that Germany’s services and manufacturing expanded in April. The composite index grew to 56.3, which was near February’s figure of 56.4 that was the strongest since May 2011.The news sent euro up 0.1 percent to $1.3837 as of 10:25 a.m. in Frankfurt.

Nonetheless, separate data released by Markit on Wednesday showed that companies in euro zone lowered their prices for the 25th consecutive month in April, while Chinese manufacturing sector shrunk, the fourth successive month to do so. Inflation in the euro zone stood at 0.5 percent in March. The European Union’s statistics department will release inflation figures for April on Wednesday.

In other news, report released by the European Automobile Manufacturer’s Association showed that sales of new cars in Europe rose over 10 percent in March, extending gains for a seventh straight month. Germany’s Federal Motor Vehicle Office said car new vehicle registration in the country grew 6.6 percent. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com