German business confidence climbs

Frankfurt: German business confidence unexpectedly climbed in October to the highest level in three and a half years, suggesting growth may not slow as much as some economists forecast.

The Munich-based Ifo institute said its business climate index, based on a survey of 7,000 executives, rose to 107.6 from 106.8 in September. That’s the highest since May 2007.

Economists had expected a drop to 106.5, according to the median of 38 forecasts in Bloomberg News survey.

Surging exports helped Germany’s economy expand 2.2% in the second quarter, the fastest pace in two decades. While foreign demand for German goods may wane as the global recovery stutters, falling unemployment is boosting consumer confidence and spending at home.

The government this week more than doubled its 2010 growth forecast to 3.4%.