Germany Ifo Index Rises Clearly in May to Two-Year High

25 May 2021

By David Barwick – FRANKFURT (Econostream) – German business confidence rose clearly in May as both expectations and assessments of the current situation improved, economic research institute Ifo said on Tuesday.

The German Ifo business climate index rose 2.6 points, the fourth monthly increase, to 99.2, the highest reading since May 2019.

Manufacturing companies ‘were once again markedly more satisfied with their current business’, according to Ifo, but not as optimistic, so that the subindex rose only slightly.

The business climate index among service companies reached a 15-month high, driven by ‘much more optimistic expectations’, Ifo reported. ‘Assessments of the current situation also improved, with optimism returning to hospitality and tourism in particular.’

In trade, companies were happier about the present situation and cautiously optimistic about their outlook, Ifo said. ‘While wholesalers continue to benefit from positive developments in manufacturing, retailers are hoping the economy will open up further’, the research institute said.

Construction companies were ‘somewhat’ more satisfied with current conditions and ‘less pessimistic’ looking forward, Ifo said. ‘However, material shortages became an even more pressing concern’, it added.