BERLIN: Confidence among German companies improved in April to its highest level in nearly a year, a closely watched business survey showed, extending a strong start to 2015 for Europe’s biggest economy.
Still, a drop in expectations for future business raised doubts about the durability of Germany’s upswing and whether Europe’s economic locomotive will generate enough momentum to boost its languishing neighbors, such as France and Italy.
Germany’s Ifo think tank said Friday its business climate index rose to 108.6 in April from 107.9 in March, hitting its highest level since June 2014. Economists in a Wall Street Journal poll had expected the indicator to rise to 108.4.
The roughly 7,000 companies polled by Ifo were more upbeat about their current business situation, but scaled back their expectations for the next six months for the first time since October.
The Ifo index continues to point to stronger growth in 2015 than much of last year, but evidence is building that the upside is limited.
The overall message from the Ifo is positive, even if it raises a question about the momentum of growth,” just as the latest survey of German purchasing managers did, said J.P. Morgan economist Greg Fuzesi.
A less rosy outlook may disappoint those who had hoped that the upswing in Germany—which makes up about 30% of the eurozone’s gross domestic product—will be sturdy enough to carry the entire 19-member eurozone. Germany’s GDP expanded strongly in 2010 and 2011, but that failed to provide a lasting lift to the eurozone as France and Italy floundered.
