German business sentiment rose to the highest level in more than a year
German business morals increased in July to the highest level in 13 months, a survey showed on Friday, although analysts warned that economic views remained weak.
The IFO Institute said its business climate index rose to 88.6 in July, the highest since June last year, from the previous 88.4 months. Analysts surveyed by Reuters estimated the increase to 89.0.
“German business sentiment is still driving a wave of optimism,” said Carsten Brzeski, Head of Global Macro Di Ing, added that the seven increase in the most prominent German indicator was very extraordinary.
However, Brzeski said it is not clear whether optimism is based on a stronger economic fundamentals or just dreams.
The German business seems to focus on its good side of what can happen under new government, rather than sustainable economic uncertainty and trade tension, he added.
The German parliament approved March’s plan for a large-scale spending surge, with 500 billion euros ($ 587 billion) special funds for infrastructure and planning to remove defense investment from borrowing rules.
The leading German companies including Siemens Sie and Deutsche Bank DBK also announced a large investment initiative on Monday which aimed at reviving investor confidence in the largest economy in Europe.
“This fiscal stimulus will definitely improve the economy, although the prospect of long -term growth remains very calm,” said Joerg Kraemer, head of economist at the Commerzbank.
Anemia economy
“The increase in the German economy remains anemia,” said President Ifo Clemens Fuest.
While the current condition index rose to 86.5 out of 86.2 in the previous month, the business expectation index was almost unchanged.
“The uncertainty remains high, which burdens the economy,” Klaus Wohlrabe, Head of Survey at IFO, told Reuters.
Wohlrabe estimates that the German economy stagnates in the second quarter and will begin to grow with a little in the second half of this year.
“But there is a lack of momentum and dynamism,” he said.
The economy grew by 0.4% in the first quarter of 2025 from the previous quarter. The initial results for the second quarter will be published on Wednesday.
Source: Reuters
