Source: Sharecast
The latest Business Climate Index from the Ifo Institute rose to 85.6 from 85.0 in May, in line with market forecasts. Within that, the current conditions index edged up to 87.0 from 86.1, while expectations improved modestly, ticking 0.2 points higher to 84.1.
Among individual sectors, the Ifo said the manufacturing index had "noticeably" improved expectations, although the current climate remained depressed. Germany’s economy, the European Union’s biggest, is heavily reliant on manufacturing.
The business climate index improved across the services, trade and construction sectors.
"Firms perceive the business environment as less uncertain," Ifo president Clemens Fuest said. "German companies are hoping for geopolitical tensions to ease."
Carsten Brzeski, global head of macro at ING, said: "Hope is back. Not only expectations but also the current assessment component improved in June.
"While some football pundits might credit the German national team’s World Cup performance for this shift in general sentiment, the talks between Iran and the US on the reopening of the Strait of Hormuz are probably the real driver behind the renewed optimism.
"However, before getting overly enthusiastic, even with today’s increase the Ifo index still remains below its pre-war level."
The Ifo’s business climate index is based on around 9,000 monthly responses.