BERLIN: German business morale rose in December for the second month running, a survey showed on Thursday, adding to signs that Europe's largest economy is on course to pick up in the fourth quarter after narrowly avoiding a recession in the third.
Ifo's business climate index, based on a monthly survey of some 7,000 firms, increased to 105.5 in December from 104.7 the previous month. That was the highest reading since August and compared with the Reuters consensus forecast for 105.4.
Ifo President Hans-Werner Sinn said falling oil prices and the weaker euro were "seasonal gifts" to the German economy, which has traditionally been driven by exports, though it has recently been hit by a slowdown in key euro zone trading partners and the West's confrontation with Moscow over Ukraine.
Firms became more optimistic about their prospects for the next six months while their assessment of the current situation was unchanged from last month.
"German business confidence confirmed the decent rebound of the economy in the final quarter of the year," said Carsten Brzeski, economist at ING, adding that some worries had faded.
"The Ukraine crisis has calmed down, without being solved; the rest of the euro zone should continue to recover, albeit at a too low pace; and the negative impact from the timing of the summer vacation has finally disappeared," he said.
The German economy shrank in the second quarter but managed to skirt a recession in the third thanks to a strong rise in consumer spending and a small boost from foreign trade.
Ifo economist Klaus Wohlrabe said Thursday's survey suggested there were signs of a change in trend in the economy.
Other recent data has painted a mixed picture of the German economy, with industrial output, orders and investor sentiment rising while exports have fallen and private sector growth has slowed.
The December Ifo index showed improvements in the manufacturing and wholesaling sectors while retail and construction took a turn for the worse.
Separately, Germany's engineering trade association said it still expected the sector's output growth to accelerate to 2 percent next year but warned further declines in sales to Russia and sluggish reforms in France and Italy would create a drag.
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