The Ifo Institute said on Monday that German businesses’ mood stayed the same in May, with a drop in the services sector.
The business climate index, which is closely watched, stayed at 89.3 points in May, with companies being less happy with the current situation, according to a report from a think tank.
Things did look better, though. Trade, industry, and construction all got better, while the services industry had a hard time. The manufacturing sector got better for the third month in a row, but the backlog of orders kept going down.
In 2023, Germany’s economy, which is the biggest in the eurozone, is slowly crawling out of a recession. New data shows that Germany’s GDP grew by 0.2% in the first quarter, up from a 0.5% drop in the fourth quarter that was later revised down.
“There’s no doubt that things are getting better. Carston Brzeski, ING’s global head of macro, said after the May 24 GDP revision, “Don’t get too excited just yet. Even with today’s GDP data, the economy is still not back to where it was in early 2022.”
Now, investors are waiting for the European Central Bank to cut interest rates at its meeting on June 6.
Philip Lane, the chief economist at the European Central Bank, gave hints of this kind of cut in an interview with the Financial Times that came out on Monday. “Unless something really surprising comes up, there is enough in what we see right now to lift the top level of restriction,” he said.
But Lane made it clear that the central bank wasn’t ready to make a bunch of cuts at once. “We still need to be strict all year long,” he said. “That’s the best way to frame the debate. “But we can move down a bit in the zone of restrictiveness.”
The DAX 30 index in Germany Monday was a small up day for DX:DAX because markets in London and the US are closed for the holidays.
