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German Business Sentiment Rises Slightly

German business sentiment improved a bit in April, the Ifo Institute said Monday.

The Ifo business-climate index came in at 96.8 points in April compared with 96.6 points in March. Economists surveyed by The Wall Street Journal had forecast the index at 97.4 points.

Companies have become less optimistic about the coming six months. The expectations component fell to 99.5 points from a revised 100.3 points in March, Ifo said.

“Both the third wave of infections and bottlenecks in intermediate products are impeding Germany’s economic recovery,” Ifo said.

However, companies assessed their current business situation with more optimism than the previous month, and this component rose to 94.1 points in April from 93.1 points in March.

The Ifo index is based on a poll of about 9,000 companies in manufacturing, services, trade and construction.

In manufacturing, the business-climate index reached the highest level since May 2018, rising to 25.3 points in April from 24.0 points in March. Companies reported significantly improved business performance and high demand, but optimism about economic conditions in the next six months declined. Of the companies surveyed, 45% reported bottlenecks in intermediate products, the highest value since 1991, Ifo says.

In the service sector, the business-climate indicator fell to 3.5 points from 6.6 points in the previous month. Service providers were slightly less satisfied with their current situation.

“While the logistics industry is benefiting from the upswing in manufacturing, other industries are still suffering, in particular hospitality and tourism,” Clemens Fuest, president of the Ifo Institute, says.

In trade, the business-climate index rose to minus 0.5 points in April from minus 1.4 points in March, thanks to much more upbeat assessments of the current situation, especially among car dealerships. In contrast, there was much more pessimism regarding the coming months.

In construction, the business-climate indicator fell to 0.4 points from 2.4 points in the prior month, as companies were somewhat less optimistic about their current situation, while expectations were still marked by notable skepticism.
Source: Dow Jones

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