The atmosphere in the German economy continued to brighten up in May and reached the highest value for almost a year.
The IFO business climate increased by 0.6 points to 87.5 points, as the IFO Institute announced in Munich on Thursday. The most important German economic barometer rose the fifth month in a row and reached the highest value since June. “The German economy is slowly receding,” IFO President Clemens Fuest commented on the survey result.
Economists had expected an increase in the IFO index, but on average only 87.3 points. However, the survey of around 9,000 companies showed that the assessment of the current situation has deteriorated slightly. However, expectations of future business have increased significantly.
“The recently increased uncertainty among companies has decreased something,” said Fuest. In the processing industry there was even a significantly better mood. Here the companies have particularly noticed the expectations upwards.
“We draw a little more optimism from the data that the manufacturing trade is slowly working out of the recession,” said Robin Winkler, chief economist for Germany at Deutsche Bank. Analyst Jens-Oliver Niklasch from Landesbank Baden-Württemberg also referred to the monetary policy of the European Central Bank (ECB). The ECB has now almost halved the key interest rates. “That should be reflected in the real economy,” said Niklasch.
The positive development has also continued in the area of services, as can be seen from the IFO data. As the institute continued to say, the area of transport and logistics recovered from the slump in mood that the customs announcements had caused. The mood has recently improved in the construction industry.
Ulrich Kater, chief economist of the Dekabank, referred to the importance of the USA’s trade policy for the further development of the German economy. The previous results in the trade talks with the US government have encouraged German companies again. However, the mood of the German companies is still “like a puppet on the threads of Donald Trump’s trade policy,” said Kater.