GERMAN BUSINESS CONFIDENCE RISES AS CHINA CONCERN KEPT IN CHECK

German business confidence unexpectedly rebounded in August as companies brushed off concerns that China’s slowing economy will drag on global growth.

The Ifo institute’s business climate index climbed to 108.3 from 108 in July. The median estimate was for a decline to 107.6, according to a Bloomberg survey of economists.

The Bundesbank said in its August monthly bulletin that the German economy is poised for “solid” growth in the rest of the year. Domestic spending, bolstered by record-low unemployment and borrowing costs, could provide a bulwark against weakness in China, the nation’s third-biggest trading partner.

German overseas sales climbed 2.2 percent in the three months through June, according to data on Tuesday from the Federal Statistics Office in Wiesbaden. Private consumption rose 0.2 percent, while capital investment shrank 0.4 percent. The economy expanded 0.4 percent, matching an Aug. 14 estimate.

Chinese demand has been key for German companies in recent years, and the nation’s trade deficit with China fell to the lowest this century in 2014 at about 5 billion euros ($5.8 billion). The gap has widened to 7.3 billion euros in the first half of 2015.

Germany’s DAX Index of stocks has dropped more than 20 percent since reaching a record in April, wiping out its gains for the year. Automakers Daimler AG and BMW AG have tumbled more than 15 percent in August through Monday.

Even so, German manufacturing growth accelerated to the fastest pace in more than a year this month, Markit Economics said on Friday. Consumer spending remains supported by record-low unemployment and borrowing costs, and the Bundesbank said this month that domestic demand will feature more strongly in the second half of the year.

The euro-area economy, which expanded 0.3 percent in the second quarter, may also offer support. A renewed decline in oil prices and massive monetary stimulus from the European Central Bank is helping the region recover from its longest-ever recession.

The Ifo index is based on a survey of about 7,000 companies in manufacturing, construction, wholesale and retail.

source: Bloomberg