German business morale up despite looming recession

German business confidence improved in November, a key survey said Thursday, as hopes grow that a looming recession in Europe’s top economy will be less severe than feared.

The Ifo institute’s monthly confidence barometer, based on a survey of about 9,000 companies, reached 86.3 points, rising for a second month after a revised 84.5 points in October. 

Prior to October, the reading had fallen for four months straight. 

“Sentiment in the German economy has improved,” Ifo president Clemens Fuest said in a statement.

“Pessimism regarding the coming months reduced sharply. The recession could prove less severe than many had expected.”

Germany is facing soaring inflation -- consumer price rises hit 10.4 percent in October -- driven by high energy costs after Russia slashed gas supplies following its invasion of Ukraine.

The government has forecast that Europe’s economic powerhouse will contract 0.4 percent in 2023, with inflation set to remain stubbornly high.

But hopes are growing that government relief measures -- including a 200-billion-euro ($208-billion) package to shield companies and citizens from inflation -- will soon bring prices down.