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Restaurant in Berlin: Gradually out of the weak phase
Photo: IMAGO
It is the fourth increase in a row: the German economy is again looking to the future with more optimism.
The Ifo business climate index rose to 91.1 points in February - from 90.1 points in the previous month, as the Munich Institute announced in its survey of around 9,000 executives.
Economists had expected the slightly stronger increase to 91.2 points.
"The German economy is gradually working its way out of its weak phase," said Ifo President Clemens Fuest.
Although companies were less satisfied with current business than in January, expectations for the next six months increased.
Recently there had been mixed economic signals.
While the purchasing managers' index for the private sector continued to rise in February and signaled growth for the first time in eight months, the Bundesbank is warning of a winter recession in Germany.
The Ifo Institute also sees the danger of a recession as not yet averted: "The German economy will not be able to avoid a recession," said the head of the Ifo surveys, Klaus Wohlrabe.
"But this one will be mild."
Hospitality and tourism breathe a sigh of relief
After shrinking by 0.2 percent at the end of 2022, the economy could lose momentum in the current quarter, according to the Bundesbank.
Experts speak of a recession when the gross domestic product (GDP) falls for two consecutive quarters.
Despite this danger, many companies have long since made progress mentally.
In the manufacturing sector, companies have recently recorded fewer new orders, but expectations have improved noticeably.
The service providers were also somewhat more satisfied with the current business situation - and the prospects are even better.
The mood has developed very well, particularly in the hospitality and tourism sectors.
There is also positive news for inflation-plagued consumers: According to the Ifo Institute, the proportion of companies planning to raise their prices in the next three months continued to fall in February.
"And clearly," as Wohlrabe said.
The easing of supply bottlenecks is also continuing: the proportion of companies complaining about material bottlenecks fell to 45.4 percent from 48.4 percent in January.
Wholesalers and retailers are also more satisfied with current business again, the mood slump from the previous year has been overcome.
On the other hand, the construction industry in Germany remains pessimistic in view of rising interest rates, shortage of materials and shortage of skilled workers.
However, the companies in this sector were also more satisfied with their current business situation.
In turn, export expectations in industry fell, albeit only slightly.
"There's still room for improvement," said Wohlrabe, referring to German exporters.
The rise in interest costs worldwide is currently dampening demand.
Apr/Reuters
