GERMAN DATA: IFO Continues Upward Grind In May With Firmer Expectations

Germany's IFO Business Climate Index in May continued its upward grind seen since January, at 87.5 (86.9 prior), slightly surpassing expectations of 87.3 for its highest since Jun 2024 (2015=100). The print appears more optimistic than the flash PMI release earlier today, with both services and manufacturing sentiment rising according to IFO. Overall, "the German economy is slowly regaining its footing", IFO comments.

• Higher expectations of 88.9 (vs 88.0 cons; 87.4 prior) were responsible for the overall uptick, while the current assessment deteriorated slightly to 86.1 (vs 86.6 cons; 86.4 prior).
• Perceived uncertainty decreased slightly.
• Broad-based improvement in climate across sectors:
  • "In manufacturing, the index rose significantly. Companies revised their expectations noticeably upward. They also assessed their current situation as somewhat better. Order intake stabilized. The upturn in sentiment was particularly strong in the food industry, while sentiment in the chemical industry deteriorated slightly."
  • "In the service sector, the business climate continued to improve. This was due to improved expectations. However, the current situation was assessed somewhat less positively. The transport and logistics sector recovered from the slump in sentiment caused by the customs announcements."
    "In trade, the index rose noticeably. Expectations in particular rose sharply in both wholesale and retail trade. Traders were also more satisfied with their current situation.
    "In construction, the business climate improved for the fourth time in a row. Companies assessed their current situation more positively. Expectations are gradually becoming less pessimistic."