(Updates with current conditions in fifth paragraph.)
Nov. 16 (Bloomberg) -- German investor confidence rose for the first time in seven months in November as the economy, Europe’s largest, powered ahead of its euro-area neighbors.
The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict developments six months ahead, increased to 1.8 from minus 7.2 in October. Economists expected a gain to minus 6, according to the median of 33 forecasts in a Bloomberg News survey.
Germany’s economy will expand 3.7 percent this year, according to the government’s council of economic advisers. That would be fastest growth since 1991. The performance contrasts with fellow euro-region nations such as Ireland and Greece, whose economies are contracting as their governments slash spending to rein in budget deficits.
“I doubt that the current periphery troubles will have clouded analysts’ views of the German economy,” said Jens Kramer, an economist at NordLB in Hanover. “Every single indicator shows German growth remains robust. Growth is broadening and the domestic economy is picking up.”
ZEW said its gauge of the current situation increased to 81.5 from 72.6. The euro rose after the report to $1.3612 from $1.3592 beforehand.
The benchmark DAX share index has risen 10 percent in the last six weeks, unperturbed by Ireland’s worsening fiscal crisis as German companies reported higher profits.
Of the 28 companies on the DAX that have announced quarterly results since Oct. 7, more than two thirds have beaten analyst estimates for per-share income, according to data compiled by Bloomberg.
Linde AG, the world’s second biggest maker of industrial gases, said on Nov. 2 that third-quarter profit rose 50 percent.
German export-oriented companies have benefitted from stronger demand from emerging economies, particularly China.
Volkswagen AG, Europe’s largest carmaker, said on Nov. 12 that October sales rose more than twice as fast as the worldwide auto-market average, as demand for its VW and Audi models in the U.S. and China surged.
The German economy grew 0.7 percent in the third quarter after record expansion of 2.3 percent in the second, outpacing the euro region as a whole.
Still, the sovereign-debt crisis may damp German growth by curtailing demand for its goods across the region as governments introduce austerity measures.
Germany is leading a drive to remedy Ireland’s debt woes before other countries succumb to the speculation that claimed Greece as the first victim.
After 13 straight days of price declines, Irish bonds began to rally late last week as investors bet a bailout is imminent from the European Union’s 750 billion-euro ($1 trillion) fund, which was created with help from the International Monetary Fund in May to stabilize the 16-nation euro economy.
“If May’s experience is anything to go by, Germany will actually be a beneficiary of the current Ireland/Portugal crisis,” said Carsten Brzeski, an economist at ING Group in Brussels. “It will weigh on the euro and it’ll keep interest rates low.”
--With assistance from Gabi Thesing in Frankfurt and Jana Randow in Mannheim. Editors: Matthew Brockett, Jennifer Freedman