Sentiment among German businesses improved in April despite the new tariffs announced by US President Donald Trump, according to a survey by a leading German economic institute published Thursday.
The ifo Institute’s business climate index saw a slight uptick this month, rising by 0.2 points to 86.9 points, and defying economists’ expectations who had expected business sentiment to worsen after Trump announced a slew of new tariffs on April 2.
However, the report suggests that expectations regarding future business among the 9,000 companies surveyed have deteriorated slightly.
“Uncertainty among the companies has increased,” ifo institute president Clemens Fuest noted, adding that “the German economy is preparing for turbulence.”
But companies assessed the current business climate to be more favourable, with sentiment improving in particular in the service sector, according to the survey.
“Companies were more satisfied with the current business situation,” while “expectations remained slightly skeptical,” the institute said.
In the construction sector, sentiment rose to its highest level since May 2023, the survey found.
Meanwhile, the index fell among manufacturing and trade companies, following improvement in the previous month, with the uncertainty surrounding Trump’s trade policies weighing on industry.
Landesbank Baden-Württemberg analyst Elmar Völker said the survey indicated “a small light at the end of the tunnel,” but cautioned against premature optimism.
Companies evidently believe that they can adapt to the new conditions in the global economy, said chief economist Ulrich Kater from Dekabank. “Hopes are pinned in particular on the European domestic market and other major economic regions outside the US.”
Source: dpa.com