Germany Ifo business climate index beats forecasts, hits highest since July 2011

The German Ifo business climate index surprised markets to the upside, coming in at 112.3 points, its highest level since July 2011. Data beat analysts’ expectations for a slight rise to 111.1 for the month.

The gain in the headline index was supported by improvements in the sub-indices for both current trading assessments and future expectations, which rose to 119.3 and 105.7 respectively.

The trade and industry component rose to 17.4 from 15.0 with a strong gain in the manufacturing sector. Construction edged higher on the month with the current situation at the strongest level since 1991. Retail confidence was also higher, although there was a retreat in wholesaling after a surge seen last month.

Data follows last week’s PMI surveys, which suggested the German economy was in its best health for six years and adds to the evidence that euro zone's biggest economy was gaining momentum.

Markets now await data from the European Commission which will publish a gauge for economic confidence in the 19-nation currency bloc on Thursday, and the European Union’s statistics agency will release March inflation data on Friday.