- Wednesday, October 16, 2024
The business sentiment in Germany showed signs of improvement in October after five consecutive months of decline. Firms in the manufacturing, services, and construction sectors displayed a more optimistic outlook towards future expectations.
According to the Ifo Institute, the Ifo business-climate index rose to 86.9 in October from 85.8 in September, surpassing economists' expectations for a more modest increase to 85.9.
Clemens Fuest, the president of Ifo, expressed a positive outlook for Germany's economy, stating that a silver lining could be seen ahead.
The manufacturing sector saw an improvement in sentiment due to higher expectations of business activity. However, firms still viewed their current situation as weaker, with orders remaining subdued.
On the other hand, the services sector exhibited considerably more positive sentiment for both current and future activity.
Confidence in the construction sector increased slightly, while businesses in the trade sector became more pessimistic, according to Ifo.
The overall indicator for current conditions rose to 89.2 in October from 88.7 in September, while expectations improved to 84.7 from 83.1.
Fritzi Koehler-Geib, chief economist at KfW, attributed the improved hopes for business activity to better expectations for household spending, as real wages rise alongside easing inflation. However, she also highlighted the potential risk posed to the economy by the recent violence in the Middle East.
The Ifo index is based on a poll conducted among approximately 9,000 companies across manufacturing, services, trade, and construction sectors.
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