Sentiment among German companies has improved. The ifo Business Climate Index rose to 87.5 points in May, up from 86.9 points in April. This was due to less skeptical expectations. However, companies assessed their current business situation as somewhat less favorable. The recent sharp rise in uncertainty among companies has eased somewhat. The German economy is slowly regaining its footing.

In manufacturing, the index rose significantly. Companies revised their expectations noticeably upward. They also assessed their current situation as somewhat better. Order intake stabilized. The upturn in sentiment was particularly strong in the food industry, while sentiment in the chemical industry deteriorated slightly.

In the service sector, the business climate continued to improve. This was due to improved expectations. However, the current situation was assessed somewhat less positively. The transport and logistics sector recovered from the slump in sentiment caused by the customs announcements.

In trade, the index rose noticeably. Expectations in particular rose sharply in both wholesale and retail trade. Traders were also more satisfied with their current situation.

In construction, the business climate improved for the fourth time in a row. Companies assessed their current situation more positively. Expectations are gradually becoming less pessimistic.

Source: ifo Institute
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