The mood among German business was euphoric in May. The ifo Business Climate Index rose from 113.0 points last month to 114.6 points, the highest figure on record since 1991. Companies upwardly revised assessments of both their current business situation and their business expectations significantly. This development in the ifo index combined with other key economic indicators, points to economic growth of 0.6 percent in the second quarter. Economic activity in Germany remains very brisk.
In manufacturing the index rose significantly. Assessments of the current business situation improved, reaching their highest level since July 2011. Business expectations are also far more optimistic than last month. Capital goods manufacturers in particular reported very good ongoing business and their order books are filling up. Many manufacturers are planning to ramp up production and prices are expected to rise.
In wholesaling the business climate improved thanks to far more optimistic business expectations. Assessments of the current business situation, by contrast, edged down from last month’s record level.
In retailing the index declined, but remained high. Retailers made slight downward adjustments to both their assessments of the current business situation and their business expectations.
In construction the index rose. Assessments of the current business situation improved again to reach their highest level since 1991. Expectations remain almost unwaveringly optimistic and construction activity picked up markedly.