German Business Sentiment Strongest In More Than A Year

(RTTNews) - German business confidence improved to the highest level in more than a year in July despite heightening trade tensions, survey results from the Munich-based ifo Institute showed on Friday.

The business climate index registered 88.6 in July, up from 88.4 in the previous month. The reading was below forecast of 89.0 but it reached the highest since May 2024.

Overall sentiment improved as companies were slightly more satisfied with their current business, while their expectations remained largely unchanged in July.

The current situation indicator advanced to 86.5 from 86.2 a month ago. However, it was below economists' forecast of 86.7.

At the same time, the expectations indicator edged up to 90.7 from 90.6 in the previous month. The score was seen at 91.1. The upturn in the German economy remains sluggish, ifo Institute President Clemens Fuest said. In manufacturing, the business climate index strengthened in July with notable increases in assessment about their current situation and expectations.

The business climate in the services sector deteriorated. Current business activity was assessed less favorably and expectations were revised slightly downward.

Similarly, sentiment among traders weakened somewhat due to more pessimistic expectations. However, the current situation improved slightly.

In construction, the index rose again in July. Both assessments of the current situation and expectations improved.

"Despite a long list of nearer-term downside risks for the economy, the announced fiscal stimulus is still working its magic - and German businesses are continuing to ride the wave of optimism," ING economist Carsten Brzeski said. Brzeski observed that businesses seem to be focusing on the bright side of what could happen under the new German government, rather than fearing the downsides from ongoing uncertainty and trade tensions.