German Ifo business confidence improves more than expected

German business confidence improved more than expected in May, according to a widely-followed survey.

The IFO Institute’s business climate index rose to 107.7 from 106.7 in April, beating economists’ expectations for a reading of 106.8.

Meanwhile, the expectations index increased to 101.6 from 100.5, surpassing expectations of 100.8, while the index of current conditions pushed up to 114.2 from 113.2.

Pantheon Macroeconomics noted the improvement in sentiment was seen across all industries, with the rebound in retail sentiment and further upturn in construction confidence the stand-out details.

“Overall, the IFO indicates that the cyclical recovery is resilient to increased volatility in financial markets and subdued global growth, but it also indicates that growth will slow in Q2, following a sizzling Q1,” it said.

Capital Economics said the rise in the Ifo suggests the economy has continued to grow at solid rates, but the fast pace seen in the first quarter will not be sustained.