Business confidence in Germany improved in January to its highest level since June, adding to signs of resilience in economic activity at the start of the year as optimism returned as fears of a looming recession eased.
The Ifo Business Climate Index rose to 90.2 in January from 88.6 in December, the fourth straight month of improvement, data from the Ifo Institute showed on Wednesday. The increase was roughly in line with expectations of economists surveyed by The Wall Street Journal.
Data for January showed that business confidence continued to recover from September’s lows. However, sentiment remained subdued compared with the situation before the Ukraine war, when the index was 98.8.
“The mood in the German economy has improved,” said Ifo President Clemens Fuest. “The German economy has started the year more confidently,” he said.
A recent fall in natural gas prices, the government’s imposition of energy price caps on businesses and the rapid reopening of China may have boosted confidence in the near-term outlook.
The Ifo measure of expectations rose to 86.4 from 83.2. However, an index assessing current conditions edged down to 94.1 in January from 94.4 in December.
The Ifo index is based on surveys of around 9,000 companies in the manufacturing, services, trade and construction sectors.
Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com
