German Business Morale Improves Despite Iran War

German business confidence unexpectedly rose in May, breaking a streak of declines linked to the Iran war and offering cautious optimism that Europe’s largest economy may be proving more resilient than initially feared.

Germany’s ifo Business Climate Index rose in May, reflecting improving sentiment among companies despite geopolitical uncertainty.

Germany’s closely watched ifo Business Climate Index increased to 84.9 points in May from 84.5 in April, according to data released Friday, Quirino Mealha reported for Euronews.

The ifo Business Climate Index is a key early indicator of economic developments in Germany and is published monthly by the Munich-based ifo Institute.

Economists had expected sentiment to weaken slightly as higher energy prices and geopolitical uncertainty continued to weigh on Europe’s industrial sector.

The May survey, based on responses from around 9,000 companies, showed firms were more optimistic about both current conditions and future prospects across manufacturing, services, and trade.

However, confidence slipped slightly among construction companies, according to an Agence France-Presse (AFP) report.