German business climate rebounded in June despite the debt crisis undermining confidence in the Eurozone, results of a key survey revealed Tuesday. The survey results strengthened expectations that the biggest Eurozone economy performed well in the second quarter.
The business climate index climbed to 101.8 in June from 101.5 in May, the Munich-based Ifo Institute for Economic Research said. Economists had forecast a slight decrease to 101.2. Business climate has brightened in manufacturing, wholesaling and construction industries, but was cloudy in retailing.
"June's rise in the German Ifo is a relief amid growing evidence elsewhere that troubles in the periphery are starting to damage sentiment in the core euro-zone countries," said Jennifer McKeown, an economist at Capital Economics.
A measure for current economic conditions in Germany rose for the fourth straight month in June, to 101.1 from previous month's 99.4. That was also above the expected reading of 99.8. For the fourth time in succession, manufacturers assessed their current business situation more favorable. The surveyed wholesalers and constructors were more satisfied with their current business situation. Moreover, pessimism lessened in retailing.
"Right now, the only worry of the German economy should be sluggish domestic demand," ING Bank economist Carsten Brzeski said. "For the time being, the German export engine is running smoothly, making Germany the economic powerhouse of the Eurozone."
While businesses have given a more positive estimation of the current situation, their expectations for the coming six months are less optimistic for the second time in a row. The expectations index declined to 102.4 from 103.7. Manufacturers' optimism weakened, while wholesalers and retailers showed cautious optimism. Only contractors showed increased confidence about the six-month outlook.
Commerzbank economist Jörg Krämer said the sharp rise in the Ifo business situation index suggest that the German economy expanded strongly in the second quarter. Further, the second consecutive fall in the expectations index indicates that growth will slow in the second half of the year.
The German economy expanded 0.2% sequentially in the first quarter, unchanged from the fourth quarter of last year. On the back of strong industrial and export performance, most economists expect robust growth in the second quarter. The Federal Statistical Office is set to release a preliminary report on the second quarter GDP on August 13.
"We believe data will confirm that German growth has been strong in the second quarter and we expect the economy to keep the momentum going in the fourth quarter," Danske Bank senior economist Frank Øland Hansen said. Germany's central bank, the Bundesbank, said in its latest monthly bulletin that it expects strong growth in economic output in the second quarter.
For comments and feedback contact: editorial@rttnews.com
June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.