German firms see their country's business climate as significantly improved and are even more optimistic about the next six months, said a new survey. The buoyant mood comes despite challenges for Europe's top exporters.
German business confidence soared to a "jubilant" new high in June, having already reached a quarter-century peak the previous month, the Munich-based Ifo Institute for Economic Research said Monday.
The closely-watched Ifo business confidence index set a new record of 115.1 points, defying expectations of analysts of a slight decline after it reached 114.6 in May, the highest since 1991.
Ifo calculates the score from a survey of 7,000 companies, who are asked to give their assessments of the current business situation and their expectations for the next six months.
The strong optimism comes despite challenges for Europe's top exporters, from US President Donald Trump's "America First" stance on trade to Britain's looming exit from the European Union.
"Sentiment among German businesses is jubilant," said Ifo president Clemens Fuest in a statement. "Companies were significantly more satisfied with their current business situation this month. They also expect business to improve," he added.
"Demand and order books have both progressed very well. Production plans remain focused on expansion."
The German economy expanded by 0.6 percent in the first quarter, and the government expects growth to hit 1.5 percent for the full year, while several economists have predicted it would reach or top last year's level of 1.8 percent.
Fuest said that "Germany's economy is performing very strongly. In manufacturing, the index rose slightly. Assessments of the current business situation remained unchanged at a very high level."
The optimism was shared by manufacturers - who planned to ramp up production - wholesalers and retailers, Ifo said, pointing to a lower index only in construction where the assessments of current and future business nevertheless remained at a high level.
In the wholesale sector, the business confidence index was at its highest since 2010. "Retailers were also significantly happier with their current business. Expectations were at their most optimistic since September 2015," Fuest said.
Last week Ifo raised its forecast for growth in the German economy for 2017 to 1.8 per cent and 2 per cent for 2018 based on rising consumer demand, construction activity and exports.
sri/dr (AFP, dpa)