German chiefs upbeat on euro

GERMAN business confidence unexpectedly advanced in January to a three-year high, suggesting executives in Europe’s largest economy are optimistic they will overcome the effects of the euro’s appreciation.

Meanwhile in the US consumers’ confidence in the economy rose this month to the highest since July 2002 as Americans grew more optimistic about their prospects later this year, a private research group reported.

Ifo’s index of western German business sentiment rose to €97.4 from a revised €96.9 in December, the ninth straight gain and the highest reading since January 2001. Economists had expected the index to be unchanged, a Bloomberg News survey showed.

“We have reports from companies that they have seen better orders in the past three months and I hope that will soon be reflected in production figures,’ said European Central Bank board member Gertrude Tumpel-Gugerell in a televised interview with Bloomberg News.

ECB policy makers including Tumpel-Gugerell and President Jean-Claude Trichet have said they expect European economic growth to gather speed this year, even as the euro’s gains erode the value of profit and sales made in the US.

In the US the Conference Board’s index of consumer confidence rose to €96.8 this month from a revised €91.7 in December. The percentage of people who saw better business conditions and more hiring six months from now rose, the New York research group said.

The increase in optimism is showing through in greater demand at companies including Royal Caribbean Cruises Ltd. and Coach Inc.

The economy may expand 4.6% this year, the fastest since 1984, according to the latest survey of economists by Blue Chip Economic Indicators.

“Consumers are shopping more often and we see the optimism,’ said Lew Frankfort, chief executive officer at Coach, in an interview with Bloomberg News. Frankfort said the New York-based seller of luxury leather goods plans to open about 20 stores in the next year to meet demand.