Germany: German business sentiment strengthens in June

Confidence among German businesses improved and remained in optimistic territory in June. The business confidence index, elaborated by the Ifo Institute, rose from May’s 107.8 to 108.7 in June, which marked the highest reading in seven months. The result contrasted market expectations of a modest decrease to 107.5.

According to the institute, the improvement reflects that firms turned more optimistic regarding both future business development and—albeit to a lesser extent—the current business situation. The Ifo Institute commented on June’s print that, overall, “the German economy remains buoyant.” Sector-wise, sentiment rose in the construction, manufacturing and wholesaling sector. Confidence was particularly in the construction sector, reaching yet another record-high. Conversely, sentiment in the retailing sector fell, but still rested at a fairly high level.

FocusEconomics Consensus Forecast panelists expect gross fixed investment to expand 2.9% in 2016, which is unchanged from last month’s forecast. In 2017, the panel sees investment growth accelerating 2.7%.