The IFO Business Climate Index in Germany increased from 85.9 in June to 87.3 in July, reaching its highest level since October 2008.
The institute that conducts the survey of 7,000 German businesses said firms are “no longer quite so dissatisfied” with current conditions, and it “seems that the economy is gaining traction.
The expectations component of the survey rose from 89.5 to 90.4, the highest reading in over a year.
Germany’s economy, which is the largest in Europe, is heavily dependent on exports, and it fell on hard times when global demand shut down late last year.
The rise in business confidence is partly related to improving exports and the more upbeat situation in China, while the US economy seems poised to expand in the second-half of the year.
As the chart above reveals, the economy has not yet emerged from the economic slump, but sentiment indicates the recession is easing.
The improvement bears watching as Germany, which had been among the hardest hit in Europe by the recession, could surprise on the upside.
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