German entrepreneurs and small businesses in Germany experienced a significant improvement in their business climate in May, according to the Jimdo-Ifo Business Climate Index, which rose to -19.0 points from -23.8 in April, as reported by the Ifo Institute on Tuesday.
The expectations of entrepreneurs had become less pessimistic, contributing to the better mood, with the assessment of current business also showing a positive trend. “The recently strong increase in uncertainty among entrepreneurs has subsided a bit” said Ifo expert Katrin Demmelhuber.
Entrepreneurs are increasingly using artificial intelligence (AI) in their business processes, with the proportion of those using AI doubling within a year, from 14.4% in June 2024 to 30.4% in May 2025. A further 10.2% of entrepreneurs plan to use AI, up from 9.4% previously. While the AI adoption rate in this group still lags behind that of the overall economy (40.9% in 2025, 27.0% in 2024), the percentage increase in this group is slightly higher than in larger companies.
“For entrepreneurs, AI is becoming an increasingly important work tool” said Demmelhuber. “There is a lot in motion, but the potential is still far from being fully exploited.” For every third entrepreneur, AI is currently not a topic, but this proportion is decreasing (47.4% in June 2024).
The number of AI users has increased across all sectors among entrepreneurs and small businesses, with the service sector showing the most significant growth, from 23.2% in 2024 to 41.2% in 2025. The manufacturing sector also saw a notable increase, from 3.4% to 20.4%. In the retail sector, the AI adoption rate rose from 10.7% in 2024 to 22.2% in 2025, while the construction sector remained the least likely to use AI, with only 5.3% of respondents currently using the technology, up from 2.9% previously.