German Business Confidence Strongest In A Year

(RTTNews) - German business confidence rose to the highest level in a year in August, indicating the resilience of the economy despite ongoing tensions in the Middle East, low water levels in the main transportation waterways and higher energy prices, survey results from the ifo Institute showed Tuesday.

The business climate index rose to 88.8 in August from 86.7 in the previous month. This was the highest score since last August. Companies were more satisfied with their current situation, and they revised their expectations significantly upward.

Uncertainty continued to decline. Despite another rise in energy prices, the German economy is recovering, ifo Institute President Clemens Fuest said. The current situation indicator advanced to 88.5 from 86.5 a month ago. At 89.1, the expectations index hit a six-month high, and up from 86.8 in July.

In manufacturing, business confidence improved noticeably. There was a significant improvement in assessment about current business conditions. Expectations were also marked by less skepticism.

Manufacturers expect production to increase over the next three months. However, they remain dissatisfied with their order situation.

Business confidence among service providers improved. Expectations continued to brighten. Companies viewed their current business situation as more favorable.

Business sentiment in trade also improved in August. Retailers expressed greater satisfaction with current business conditions. Expectations also continued their upward trend, data showed.

In construction, the business climate index increased. This was due to noticeably less pessimistic expectations. However, companies assessed their current situation as slightly worse.

"Despite the obvious headwinds from low water levels, the never-ending war in the Middle East and the struggle to implement the announced reforms, the German economy has developed an unexpected resilience," ING economist Carsten Brzeski said.

The German economy is on track for its best growth performance since 2022, he noted.

Official data today showed that the German economy grew more than estimated in the second quarter on robust exports. Gross domestic product posted a quarterly growth of 0.3 percent, which was revised up from 0.2 percent estimated initially and followed an expansion of 0.4 percent in the first quarter.