Germany’s economic recovery continues to face challenges as business sentiment stagnated in May, according to a survey released by the ifo institute. The institute’s business climate index remained unchanged at 89.3, disappointing analysts who had forecast an improvement to 90.4.
The index, Germany’s most prominent indicator, suggests that the country’s economic recovery will not be swift. Companies were less satisfied with their current business situation. However, expectations brightened. The survey also highlighted that the manufacturing, trade, and construction sectors are recovering, although the service sector took a slight hit.
In the manufacturing sector, Germany’s business sentiment improved for the third time in a row in May. Companies were considerably more satisfied with their current business. In addition, manufacturing firms’ outlook for the coming months was less pessimistic than in April. Despite the positive signals, order backlogs continued to decline.
In the service sector, the index saw a decline. Firms across the sector expressed somewhat worse business sentiment. However, their outlook improved, with companies reporting an increase in orders.
In trade, Germany’s business climate index saw a significant increase with sentiment improving considerably. However, the sector is still cautious despite a rise in the wholesale segment.
In addition, Germany’s construction sector business sentiment improved again in May. Companies expressed satisfaction with business conditions with a less pessimistic outlook. However, the lack of orders remains a critical hurdle.
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