Business sentiment in Germany improved in October, with the IFO business climate index rising to 90.2 points from 89.9 points in September. The result was better than the expectations of analysts polled by Reuters, who had predicted an increase to 90.0 points.
The improvement is due to more optimistic expectations of companies for the coming months. The indicator of economic expectations rose to 91.6 points in October from 90.4 points a month earlier.
Current conditions remain weaker
However, German companies' assessment of the current business situation is worsening. The corresponding indicator fell to 88.8 points from 89.5 points in September.
The overall IFO index thus recorded growth, although companies continue to assess the current environment more cautiously. The data show a discrepancy between the weaker assessment of current conditions and greater optimism about business development in the coming months.
The IFO index is considered an important early indicator of the state of the German economy. In the monthly survey, companies assess both their current business situation and their expectations for future development.