Mirroring a moderate recovery, German business morale strengthened for the second straight month on improving optimism about future activity, survey results from the Munich-based Ifo Institute showed Monday.
The business sentiment index, based on response from 7,000 participants, improved slightly, as expected, to 105.9 in June from 105.7 in May.
Expectations for the coming six months rose more-than-expected to 102.5 from 101.6 in May. The reading was seen at 102.
The assessment of current conditions, meanwhile, fell to 109.4 from an originally estimated level of 110 a month ago. It was forecast to fall to 109.7.
It is not overly exciting anymore but today's Ifo simply confirms the well-known story that the German economy is cruising along smoothly, ING Bank NV's Economist Carsten Brzeski said.
Although the German economy does appear to have some upward momentum, Jonathan Loynes at Capital Economics said it is unlikely to be strong enough to drive the Eurozone as a whole out of recession in the near future.
Bundesbank expects economic activity to pick up strongly in the second quarter. It projects 0.3 percent expansion for this year.
The German economy holds its course, Ifo said. Similar to the findings of Ifo, the recent survey from the Centre for European Economic Research, or ZEW, suggested prospects for further pick up in the recovery.
Manufacturers' confidence continued to increase. They are once again slightly more satisfied with their current business situation and are clearly more optimistic about future business developments.
However, in wholesaling, the business climate index fell in June. Wholesalers are far less satisfied with their current business situation and more sceptical about their business outlook.
Similarly, the business climate cooled down slightly in retailing. Retailers are no longer quite as satisfied with their current business situation, but their business outlook brightened further.
In construction, the business climate index edged downwards. Although contractors report a slight improvement in their current business situation, they are somewhat less optimistic about future business developments.
Business confidence among service providers deteriorated in June after last month's recovery. Service providers are no longer quite as satisfied with their current business situation as last month. Moreover, expectations regarding future business activity dropped to its lowest level in six months.
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