German business confidence unexpectedly jumped to a 15-year high in June, indicating Europe's largest economy in the midst of a confidence-boosting World Cup, is overcoming near-record oil prices, a stronger euro and higher interest rates.

The Ifo economic research institute in Munich said its confidence index, based on a survey of 7,000 executives, rose to 106.8, the highest since February 1991, from a revised 105.7 in May. It reached a 15-year high of 105.9 in April.

Results of the June 2006 Ifo Business Survey

The Ifo Business Climate Index for industry and trade in Germany rose in June after having fallen slightly in the previous month. The surveyed firms appraised their current business situation clearly more favourably than in the previous month. This is the seventh time in succession that the current business situation has been assessed more positively. The decline of the business expectations did not continue; this time slightly more firms expect further improvement over the next six months. The economic recovery continues to be robust.

The business climate in manufacturing has brightened. The survey participants were again more satisfied with their current business situation. They also appraised their six-month outlook more favourably than in the previous month. Their export expectations, however, were slightly less optimistic than in May. In retailing the business climate index rose clearly and it improved slightly in construction. In both survey sectors the current situation was seen to be noticeably better than in May. Somewhat more cautious appraisals were made by wholesalers, who gave weaker assessments of their momentary situation and their future business. However, this is in the wake of considerable improvement in wholesaling in the past four months.

In eastern Germany the rise in the business climate index was nearly as strong as the federal average.