Germany: The business climate is improving a little thanks to services

(With details and quotes)

BERLIN, May 23 (Reuters) – The business climate in Germany benefited from an unexpected improvement in May thanks to the recovery of activity in services, which offset the impact of inflation, tensions in the supply chains and the war in Ukraine, shows Monday the monthly survey of the institute of economic studies Ifo.

Its business climate index rose to 93.0 from a (revised) 91.9 in April as economists and analysts polled by Reuters on average forecast a drop to 91.4 from 91.8 initially reported for April.

The Ifo adds in a statement that it observes for the moment “no measurable sign of a recession”.

“The German economy is showing resilience,” Ifo economist Klaus Wohlrabe told Reuters, adding that service companies were benefiting from the easing of health restrictions, especially in the tourism and hospitality sector. -restoration.

But the situation is more difficult in industry.

“There are no signs of the bottlenecks in the supply chains being resolved,” said Klaus Wohlrabe, adding that demand for industrial products was slowing and price expectations were deteriorating even though the rise global prices remained on the agenda.

According to official figures published on Friday, producer prices in Germany rose by 33.5% year on year in April, their highest increase ever, due in particular to the surge in energy prices caused by the war in Ukraine and sanctions against Russia.

For Alexander Krüger, economist at the private bank Hauck Aufhäuser Lampe, inflation and logistical bottlenecks risk undermining the recovery in consumption and “the question mark on the acceleration of the economic recovery in the second half of 2022 is getting bigger and bigger.”

German Finance Minister Christian Lindner told a G7 ministerial meeting on Friday that inflation must quickly be brought down to 2% and that central banks had a “great responsibility” in this regard.

(Report Miranda Murray and Rachel More, French version Marc Angrand, edited by Jean-Michel Bélot)

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