May 28, 2022
Sentiment in the German economy has brightened. The ifo Business Climate Index rose to 93.0 points in May, after 91.9 points (seasonally adjusted) in April. The companies were above all much more satisfied with their current business. In contrast, expectations barely changed, with companies remaining skeptical. The German economy has proven itself resilient in the face of inflation concerns, material bottlenecks, and the war in Ukraine. There are currently no observable signs of a recession.
In manufacturing, the index increased markedly. Companies assessed their current situation as somewhat better, and their expectations rose considerably as well. However, they are still skeptical with regard to the coming months. Demand slowed down significantly and incoming orders declined.
The business climate in the service sector improved. Service providers were much more satisfied with their current business. The last larger rise in this indicator was observed in June 2021. Expectations, however, turned more pessimistic. Transport and logistics companies in particular have concerns.
The index in trade rose again after two consecutive declines. Assessments of the current situation in particular improved. Expectations tended somewhat upward as well, although were still clearly pessimistic.
In construction, the business climate has recovered somewhat from its slump in April, driven by an improvement in expectations. Assessments of current business were also slightly better. Nonetheless, the majority of companies are still pessimistic.
Source: ifo INSTITUTE
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