Business confidence in Germany unexpectedly rose in May to raise hopes of a better second half of the year for the economy.
The Ifo business climate index, a widely watched barometer of industrial confidence, rose sharply in May, gaining a full point to 87.6 points, meaning industrial confidence is now back at levels last seen in October 2002.
Economists had been expecting the index to stagnate or rise only slightly following a sharp fall in April.
Sentiment had improved primarily in the retail sector, but also in the manufacturing and wholesale sectors, Ifo President Mr Hans-Werner Sinn noted. Only in the construction did confidence deteriorate further.
For its regular monthly survey, Ifo polls about 7,000 companies about their assessment of current business and their expectations for the next six months.
The institute's president, Mr Sinn, said that overall sentiment was being buoyed by the future outlook rather than companies' real economic situation at present.
Indeed, a breakdown of the data showed that the current sentiment sub-index fell to 78.3 points in May from 78.6 points in April.
But companies appeared to be feeling a great deal more confident about the six-month outlook, with the expectations sub-index jumping to 97.2 points in May from 94.9 points in April.
AFP