Germany’s business confidence improved more than expected in August, signaling a tentative recovery in Europe’s largest economy despite rising energy costs.
The Munich-based Ifo Institute reported its business climate index climbed to 88.8 from a downwardly revised 86.7 in July. The reading exceeded the median forecast of 87.2 among economists polled by Reuters, marking the third consecutive monthly increase.
The index, based on a survey of about 9,000 executives, reflects assessments of current business conditions and expectations for the next six months. The improvement follows a period of stagnation amid elevated energy prices and weakening industrial demand.
Separate data released on Tuesday showed Germany’s gross domestic product expanded 0.3% in the second quarter compared with the previous three months, up from the preliminary estimate of 0.2%. The revision suggests slightly stronger momentum heading into the second half of the year.
Ifo President Clemens Fuest attributed the improvement to resilience in the services sector and stabilizing supply chains, though he cautioned that risks remain elevated due to geopolitical tensions and energy market volatility.
The data underscores a gradual but uneven recovery in Germany, where manufacturing activity has lagged while services and consumer-facing industries show signs of stabilization.
