German businesses reported a slight improvement in sentiment during July, according to data released Friday by the Ifo Institute. The Ifo Business Climate Index edged up to 88.6 points, a marginal increase from 88.4 points in June.
While the upward movement exceeded initial expectations from some analysts, the overall trajectory suggests a muted economic recovery for Germany. Companies expressed marginally greater satisfaction with their current business dealings, although future expectations remained largely unchanged.
Within the manufacturing sector, the index registered a rise, reflecting a noticeably improved assessment of the current situation. Expectations within this area also demonstrated continued brightening. However, the growth of new orders remains a constraint and capacity utilization saw only a modest increase, rising from 77.0% to 77.2%.
A contrasting picture emerged in the services sector, where the business climate deteriorated. Assessments of the current business situation were revised downwards, alongside a slight correction of future expectations. IT service providers within this sector experienced a particularly challenging period. Conversely, the transport and logistics segment showed positive development, with a marked improvement in business climate.
The retail sector saw a softening of the business climate, largely driven by more pessimistic expectations. While a minor improvement was observed in the current situation, it remains overall unsatisfactory.
In the construction industry, the index recorded another increase, with both current assessments and future expectations showing signs of betterment. However, a shortage of orders continues to represent a significant challenge for businesses in this sector.