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German business confidence unexpectedly rises

German business confidence unexpectedly rises
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The latest survey from the Ifo economic research institute shows German business leaders are optimistic. That was a surprise as economists had expected the opposite. The May questionnaire polled 7,000 companies and their responses show the wholesale and retail sectors both recovered following steep declines with employers planning modest increases in hiring.

The business climate index rose to 103.5 points from April’s 102.4. The improvement in the current conditions index was better than in the one for business expectations – that is how companies see the future.

Ifo said the results point to there being only a moderate slowdown in Europe’s largest economy. The data adds to the feeling among economists that the European Central Bank will continue to leave interest rates on hold on the basis that cuts are not needed to stimulate growth and the ECB’s priority remains near-term inflation pressures.

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