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German business sentiment rose for a third consecutive month in April, a key survey showed Wednesday, as hopes grow that a recovery is getting under way in Europe’s stuttering top economy.
The Ifo institute’s closely-watched confidence barometer, based on a survey of around 9,000 companies, rose to 89.4 points, up from 87.9 points in March.
The increase was slightly higher than analysts surveyed by FactSet had expected.
The business climate reading rose across all sectors surveyed by Ifo — manufacturing, services, trade and construction.
“Sentiment has improved at companies in Germany,” Ifo president Clemens Fuest said in a statement.
“The economy is stabilising,” he added.
The German economy shrank by 0.3 percent last year as it grappled with costly energy, high interest rates and weak demand from key trading partners.
But signs are growing that a modest rebound has begun, partly thanks to improvements in industrial output and exports.
The Bundesbank central bank last week said it now expected the economy to expand slightly in the first quarter of 2024, dodging a recession, after earlier predicting a contraction.
The latest Ifo reading “looks like a trend reversal”, said LBBW economist Jens-Oliver Niklasch.
“One must remain cautious in difficult times, but at least there is now some evidence to suggest we saw the bottoming out of the economy in the winter,” he said.
If the European Central Bank’s expected interest rate cuts “also provide a boost” in the months ahead, he added, then the German economy “should see a small increase in GDP this year”.
The German economy ministry will unveil its updated growth forecasts later on Wednesday.
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