German business confidence strengthened to a six-month high in February on improving assessment about current situation and upbeat outlook, survey data from the Munich-based ifo Institute showed Monday.
The business climate index rose more-than-expected to 88.6 in February from 87.6 in the previous month. The score was the highest since last August. The expected reading was 88.4.
Companies were more satisfied with their current business situation. Expectations also developed positively, the survey showed.
“The German economy is showing first signs of recovery,” ifo Institute President Clemens Fuest said.
The current situation index posted 86.7, up from 85.7 in January and also remained above economists’ forecast of 86.1.
Similarly, the expectations indicator improved to 90.5 from 89.6 a month ago. The score was forecast to rise to 90.5.
Although the German recovery gains momentum, tariffs could spoil the party, ING economist Carsten Brzeski said.
The economist noted that January’s survey result was likely still somewhat distorted by the Greenland conflict, while today’s reading comes before German businesses have had a chance to factor in the latest tariff uncertainty.
In manufacturing, business confidence strengthened further, mainly driven by considerably better assessments of the current business situation. Expectations among manufacturers declined but the order situation developed positively, and there was an upward correction in production planning, the survey showed.
Business sentiment among service providers improved on strong improvement in expectations. They were also more satisfied with the current business situation.
Business confidence in trade declined a little with companies assessing their current situation as slightly worse. However, the outlook for the coming months was corrected upward marginally.
Business confidence in construction continued to improve. Assessments of the current situation were more positive, with the same also being true for expectations.
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