German Business Confidence Improves For Third Month

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Germany’s business confidence continued to improve in July as companies were more satisfied with their current situation and ‘carefully’ optimistic about the months ahead, survey results from the ifo Institute showed Monday.

The business confidence index rose more-than-expected to 90.5 from revised 86.3 in June. The reading was forecast to rise to 89.3. This was the third consecutive increase.

Both assessment of current situation and expectations of companies strengthened in July. The index measuring current situation came in at 84.5 in July versus 81.3 a month ago. But the score was slightly below expectations of 85.0.

At the same time, the expectations measure advanced to 97.0 from revised 91.6 a month ago. This was well above economists’ forecast of 93.7.

The German economy is recovering step by step, ifo Institute President Clemens Fuest said.

Carsten Brzeski, an ING economist said the ifo reading provided more evidence of a two-sided rebound. The V-shaped recovery continues but the bounce back is losing steam, the economist added.

The return to pre-crisis levels will take time, patience and lots of stimulus, he added.

In manufacturing, the business climate once again improved considerably. Companies’ assessment of their current situation was no longer quite as poor as in previous months. Companies also expect business to grow again in the coming months.

In the service sector, business sentiment rose strongly in July. Service providers were more satisfied with their current situation. Likewise, their expectations for the coming months logged a significant improvement.

The upswing continued in trade, especially in retail. Companies adjusted their assessments of the current situation and their expectations for the coming months markedly upward.

In construction, the business climate continued to improve in July. Construction companies were more satisfied with their current situation and their expectations were less pessimistic.

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