The IFO business climate index published yesterday, which measures German business sentiment, rose to 108.5 in September, despite analysts predicting it would fall to 108. German companies reported greater optimism about future business developments, suggesting that the German economy is robust to shocks from international markets.
“Today’s rise of the IFO index is a massive surprise. When looking at the latest events, headwinds should have been blowing strongly in the face of German companies,” said Andreas Rees of UniCredit Economics.
French business confidence returned to its long-term average, with the headline manufacturing index up to 104, according to data released by French statistical office Insee yesterday.
The increase in manufacturing confidence was driven by improved expectations within the car industry. Both surveys were released before news of the Volkswagen scandal broke, with analysts uncertain as to whether it would knock confidence.