The Institute for Economic Research (Ifo’s) overall business climate index had already hit a record high last month, and June’s survey saw the index rise from 114.6 to 115.1, in contrast to predictions that it would ease slightly.
Ifo’s two sub-indices measuring current conditions and future expectations both beat forecasts, rising to 124.1 and 106.8 respectively.
The measures are based on monthly interviews with around 7,000 German businesses across the construction, wholesale and retail industries.
Germany’s economy is already in rude health, with unemployment at a record low and economic expansion of 0.6 per cent in the first quarter, and experts are expecting the positivity to continue. Last week Ifo upgraded its its economic growth forecasts for this year and next, praising the country’s “strong and stable” growth.
Carsten Brzeski, ING’s chief economist for Germany and Austria, highlighted particularly strong reports from industrial producers, noting:
Some more relief and eu(ro)phoria after the French parliamentary elections but also a brightening outlook for the German industry are the main drivers of yet another stronger Ifo reading.
The industrial revival could be the surprise story of the year in the Germany economy. Almost unnoticed, the industry has returned from sluggish to buoyant.
Looking ahead, there is increasing evidence that investment could also pick up in the course of the year. The combination of strong orders at hand and low inventories is currently as good as in mid-2006 and late-2010.
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