Ifo business climate rises - exports remain problem child

The service sector in particular is proving to be a mood booster. Business-related service providers, for example, revised their expectations sharply upwards. Assessments of the current situation also improved - a positive trend that is giving momentum to the index as a whole. The moderate upward trend is continuing in the main construction sector. Although scepticism remains noticeable, expectations rose to their highest level since February 2022 - a ray of hope for a sector that has long suffered from material bottlenecks, price increases and sluggish demand.

The picture is different in the manufacturing sector, where the mood remains ambivalent. While expectations for the coming months are cautiously optimistic, current business is rather mixed. A look at the order backlog remains particularly critical - dissatisfaction continues to prevail here.

Trade differentiated, exports disappointed

The picture in retail is mixed. Wholesale is pulling the index upwards - thanks to better business and less pessimistic expectations. In retail, on the other hand, there is slight disillusionment. Here, the business climate fell slightly, indicating that consumer sentiment remains subdued.

The trend in exports is less encouraging. Ifo export expectations fell slightly in June and now stand at minus 3.9 points (after minus 3.0 points in May). Companies are unsettled - particularly due to the ongoing threat of US punitive tariffs and the faltering trade agreement with the US. "This uncertainty is lowering exporters' expectations," explains Klaus Wohlrabe from the ifo Institute.

Sectors such as food and beverage manufacturers were particularly hard hit. There is also a lack of positive signals in the automotive and mechanical engineering sectors. Nevertheless, there is growing export optimism in the furniture industry, leather goods and electrical equipment.

Conclusion: upward trend with question marks

The bottom line remains the same: The German economy is showing signs of recovery - but it is still on shaky ground. While the mood in Germany is slowly improving, foreign business remains a factor of uncertainty. The coming months will show whether cautious optimism will turn into a sustained upswing - or whether the brake on exports will once again dampen the mood.