The Institute for Economic Research (Ifo) Business Climate Index released on Monday, which is a measure of confidence among German managers, rose to 112.3 points in March from 111.1 points last month, its highest level since July 2011. It indicated the German economy is not only improving, but the improvement is gathering momentum.
The manufacturing sector index also rose to its highest level since July 2011, largely due to greater optimism on behalf of manufacturers.
Continued growth in demand has also driven an improved assessment of the current business situation.
Prices are continuing an upward trend. All the main manufacturing segments saw increases in the index. However, after a steep rise last month, the wholesaling business climate index fell slightly as assessments of the current business situation and expectations reduced.
The retailing index rose as retailers assessed their business situation more favorably. The short-term business outlook slightly declined. After declining for several months, March saw the business climate index in construction rise to its highest level for six months and contractors remain optimistic about the months ahead.
The Ifo Business Climate Index is based on roughly 7,000 monthly survey responses from firms in manufacturing, construction, wholesaling and retailing. The firms characterize their situation as "good," "satisfactory" or "poor" and their business expectations for the next six months as "more favorable," "unchanged" or "more unfavorable."
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