Germany: Business confidence improves in May
Business confidence rose to 99.2 in May from April’s 96.6. May’s result marked the best performance since May 2019. As a result, the index moved closer to the 100-threshold, but still indicated pessimism among businesses.
The rise came on the back of an improvement in firms’ assessments of the current economic situation, although views remained pessimistic. Views on business expectations, meanwhile, returned to optimism.
Carsten Brzeski, global head of macro at ING, added:
“Looking beyond possible short-term data distortions, the general outlook for the German economy is improving. The vaccination programme has gained further momentum and with the clear prospect of at least 50% of the population having had a first jab before the summer, a more substantial reopening of the economy should not be too far away. New variants of the virus, however, as currently witnessed in India, could definitely spoil any reopening parties. Add to this potential spillovers from US fiscal stimulus, the implementation of the European Recovery Fund in the second half of the year, a rebound in the construction sector and the fact that the manufacturing sector still has not reached pre-crisis levels, and the only way for the economy seems to be up.”