German business sentiment improved unexpectedly in December after slumping sharply in November over concerns about high oil prices and worries that the strengthening euro could damage exports, a closely watched survey showed Friday. The Ifo institute's index, based on a survey of business executives about their outlook on the current climate and for the next six months, rose to 96.2 from 94.1 in November, its highest level since April this year, and well above economists' forecasts of 93.8. The improvement in the business climate was seen in all four survey sectors _ manufacturing, construction, wholesaling and retailing. "In manufacturing, for the first time in four months, the business outlook was appraised more positively," said Ifo Institute President Hans-Werner Sinn, adding that this mitigated export expectations slightly more unfavorable than the previous month. Benchmark crude oil futures are down about US$11 per barrel from the record closing high of US$55.17 in late October. The euro hit a new all-time high against the U.S. dollar last week of US$1.3470, jumping sharply from about US$1.20 in September. The rapid rise has caused European leaders to worry that euro's strength could damage their largely export-driven recovery by making products more expensive overseas or cutting into the profits of manufacturers who seek to hold prices steady. German Economics and Labor Minister Wolfgang Clement said the rise in the Ifo Institute's index supports his growth outlook for Europe's largest economy. "I see this as a confirmation of my positive assessment of the German economy's future development," Clement said. The government expects economic growth of 1.7 percent in 2005 after an expected 1.8 percent expansion in 2004. Several research institutes recently lowered their outlook for 2005, citing the strong euro, high oil prices and a slowing of the global economy as reasons.
