German business confidence rises again, says Ifo

German car factory
Image caption Confidence in the manufacturing sector grew sharply

German business confidence has risen for the third month in row, reflecting a "positive" start to the year for Europe's biggest economy, according to the Ifo economic think tank.

The closely-watched Ifo Business Climate Index rose to 108.3 in January, up from 107.3 in the previous month.

Firms saw the current situation as less favourable, but expectations for the future had "brightened considerably".

Confidence among manufacturers grew particularly strongly.

However, confidence in the retail sector fell sharply.

Weak growth

A survey published last week suggested that investor sentiment in Germany hit a seven-year high in January.

"Did anyone say recession? Today's Ifo index shows that the German economy only made a short stopover at the end of last year and is now heading towards expansion again," said Carsten Brzeski at ING.

However, other analysts were more circumspect about Germany's growth prospects in 2012.

"With global demand growth still very weak and the euro at a pretty high level, we see the export-reliant German economy stagnating at best this year," said Jennifer McKeown at Capital Economics.

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