German business sentiment rises unexpectedly

AP News
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Posted: Jun 24, 2011 5:00 AM
German business sentiment rises unexpectedly

Business optimism rose unexpectedly in Germany during June in a fresh indication that the country's recovery remains strong despite a steady drumbeat of bad news about Greece's debt crisis.

The Ifo institute said Friday its index rose to 114.5 from 114.2 in May. The rise was unexpected _ the consensus in the markets was for a modest decline.

Germany is enjoying a strong economic recovery, based on strong exports and increasing investment in machinery and equipment at home as businesses expand. Upbeat reports from the manufacturing, wholesale and construction sectors offset a slight decline in retailing.

"The Germany economy is enjoying a robust upswing," the institute said in a statement.

The 7,000 business executives surveyed remained upbeat despite constant headlines about Greece's financial troubles. EU leaders are working on a second bailout to keep Athens from defaulting on its debts after last year's euro110 billion ($160 billion) rescue did not put the country back on its feet financially.

Most of the eurozone's economy is doing well despite financial crises in three smaller countries _ Greece, Portugal and Ireland. Together they make up only about 6 percent of eurozone gross domestic product, which means their troubles have so far not held the overall economy back much. Still, a debt default could spread turmoil through the financial system.