- Clemens Fuest, CESIfo
Group The mood of German companies improved unexpectedly in April, as the Ifo German Business Climate Index surged to 112.9, while experts expected that it would remain unchanged. Thus, the released figure hit a new record high in about six years, updating the previous month's record. Positive sentiment was registered in all four major sectors. Namely, in the retailing sector the Index reached its highest level since September 2015. In the construction sector assessments of the current business situation also hit a new record high. Similarly, estimates of the situation in the wholesale sector reached its highest value since 1991. Finally, manufacturers, especially from the electrical goods sector, also expected their production to rise. Such optimistic outlook is most likely based on a strong performance of the German economy in the Q1. The latest data on jobless claims showed that unemployment rate was equal to 3.9% and, thus, remained stable since November 2016. Nevertheless, inflation growth remained subdued, with the March inflation rate falling to 1.6%, the lowest in four months. It should be noted that April's survey was conducted prior to the first round of the French presidential election. Therefore, the Index did not reflect German businesses' reaction to the first-round election outcome.
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