German business sentiment improves again in July
German business sentiment improved more than expected in July, according to a widely-followed survey released on Monday.
The Ifo’s business climate index rose to 90.5 from 86.3 in June, beating expectations for a reading of 89.3 and marking the third increase in a row.
"Companies were notably more satisfied with their current business situation," said Ifo Institute president Clemens Fuest. "They are also carefully optimistic about the coming months. The German economy is recovering step by step."
The current assessment index printed at 84.5 in July compared to 81.3 the month before, while the expectations index increased to 97.0 from 91.6.
Andrew Kenningham, chief Europe economist at Capital Economics, said the increase in the Ifo business climate index chimes with the positive message from the PMIs published last week and suggests that the rebound in the German economy has continued at a steady pace in July.
He said the business climate index came in better than consensus but a bit lower than Capital Economics’ forecast of 92.0, meaning the index has now recouped the bulk of the fall it experienced between February and April, although it remains below its 2019 average level.
"While the German economy has clearly suffered along with the rest of the eurozone in the past five months, this survey provides more evidence that the recovery has been fairly strong," said Kenningham. "And on Thursday we expect to learn that the slump in German GDP in Q2 was relatively shallow, with GDP having declined by around 5% q/q, compared to double-digit falls in the other large countries."