“Economy is picking up speed”: Ifo index rises to two-year high


“Economy is picking up speed”
Ifo index rises to two-year high

The grueling effect of the pandemic on many entrepreneurs and service providers is well known. But now the mood seems to be improving. The latest figures from the Ifo Institute show confidence in various sectors and trades – with small cutbacks.

The mood in the boardrooms of the German economy has improved noticeably and the Ifo business climate index rose to its highest value in two years. As the Munich research institute announced, the index rose to 99.2 points in May – the highest level since May 2019.

“The German economy is picking up speed,” said Ifo President Clemens Fuest. The companies were therefore more satisfied with their current business situation and were “significantly more optimistic” about the coming months.

For the business climate index, the institute surveys around 9,000 companies every month. They are asked to assess their current business situation and to state their expectations for the next six months. In April the index had risen slightly to a revised 96.6 points.

Hope for further easing

For May, the service sector in particular appeared to be more confident. Here, the business climate index climbed to its highest value since February 2020, particularly due to significantly more optimistic expectations. “Optimism has returned, especially in the hospitality industry and tourism,” explained Fuest.

The index also made significant gains in trading: traders were more satisfied with their current business situation. “While wholesalers continue to benefit from the good industrial situation, retailers are hoping for further easing,” explained Fuest. In the manufacturing sector, the index rose slightly. The business climate also improved in the construction industry. Here, however, the problem of material shortages “worsened again”.

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