Manufacturing boost for Germany

A PICK-UP in manufacturing drove German business sentiment to its highest level in 16 months in August, adding to evidence that Europe’s largest economy is bouncing back from a brief slowdown.

The Ifo think-tank said its business climate index, based on a monthly survey of some 7,000 firms, rose to a better-than-forecast 107.5 in August, the highest level since April 2012. That was up from 106.2 in July and came in just below the highest estimate in the Reuters poll of 33 economists of 107.8.

“The German economy moved up a gear,” said Ifo economist Kai Carstensen. “Companies are more satisfied with their current business situation. Their optimism regarding future business developments – although slightly cautious – also grew.”

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The Ifo’s fourth consecutive rise will be welcome news for Chancellor Angela Merkel. With growth returning, the economy should support her bid for a third term in the election on September 22.

The German economy shrank at the end of last year and narrowly avoided recession in early 2013.

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