German business confidence increased for a fifth month in September amid signs the economic recovery is continuing in the euro area, the nation's biggest trading partner.
The Ifo institute's business climate index, based on a survey of 7,000 executives, climbed to 107.7 from a revised 107.6 in August. The figure was lower than analysts' expectations.
Europe's largest economy is benefiting from unemployment near a two-decade low and the end of the euro area's longest- ever recession.
Angela Merkel is poised for a third term as German chancellor after her Christian Democrats took the largest share of the vote at the weekend elections on the strength of her economic record.
Today's index shows that a measure of the current situation unexpectedly dropped to 111.4 in September from 112 the prior month. A gauge of expectations climbed to 104.2 from 103.3.
German investment in plant and machinery increased for the first time since 2011 in the second quarter. Unemployment was at 6.8% in August.
While the economy is showing signs of growth, the pace is uneven, according to the Bundesbank. German factory orders, industrial production and exports all declined in July, and a preliminary gauge of manufacturing for September unexpectedly dropped.
"At the start of summer 2013, the German economy didn't sustain the rebound from earlier in the year," the Frankfurt- based central bank said in its monthly report yesterday. "Company investment confirms the evidence of a solid foundation, though signs of a dramatic upswing are lacking."
The Bundesbank predicts the German economy will expand 0.3% this year and 1.5% in 2014. The European Central Bank forecasts the 17-nation euro-area economy will shrink 0.4% in 2013 and grow 1% next year.
The euro zone's gross domestic product expanded 0.3% in the three months from April to June, ending six quarters of contraction.
ECB President Mario Draghi has pledged to keep the bank's official interest rates at or below current levels for an extended period of time to support the recovery. He said yesterday that the ECB is ready to use another longer-term refinancing operation if needed to curb market rates. The bank introduced two three-year LTROs starting in December 2011 to ease a credit crunch in Europe.