But improvement solely in expectations component
The IFO Business Climate Index in Germany, a closely-watched measure of business Confidence, increased from 84.3 in May to 85.9 in June, the highest reading since November.
The good news, however, was solely the result of an improvement in the future expectations component, which tempers the overall rise in enthusiasm as the current situation remains poor – see chart.
The survey of 7,000 businesses shows the worst recession in 60 years has not yet ended but the worst is probably over for Europe’s largest economy.
Though a bit confusing at first glance, I like the chart below because is reflects an easing of the recession in manufacturing.
Note the improvement from extremely lows levels in December and January but the economy is not yet in the ‘upswing’ category.
The IFO stands in stark contrast to the unbridled enthusiasm seen in the ZEW survey of institutional sentiment. See ZEW on upward trajectory.
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