Germany’s business confidence improved in March to the strongest level since mid-2019 as firms were more satisfied with their current situation and turned more optimistic about the months ahead, survey results from the ifo Institute showed on Friday.
The business confidence index rose to 96.6 in March from revised 92.7 in February. The score was forecast to climb moderately to 93.2. The index reached its highest level since June 2019.
Despite the rising rate of infections, the German economy is entering the spring with confidence, Clemens Fuest, ifo Institute President, said.
The strong Ifo business confidence index for March provided further evidence that, the auto sector aside, Germany’s manufacturers are flourishing, Andrew Kenningham, an economist at Capital Economics, said.
But the rest of the economy is faring less well, and the extension of the virus restrictions means a sustained recovery is unlikely until the second half of the year, Kenningham added.
The survey showed that companies were clearly more satisfied with their current business conditions in March. Moreover, optimism about the coming months has also returned.
The current conditions indicator climbed to 93.0 from 90.6 in the previous month. The score was above economists’ forecast of 91.3.
Likewise, the expectations indicator advanced to 100.4 from revised 95.0. The expected level was 95.0.
Business confidence in manufacturing continued to recover in March. Sentiment rose markedly in the service sector, but hotels, restaurants, and tourism still find themselves in a very bad situation.
Further, in trade, business climate surged in March and confidence in the construction sector returned to positive territory.