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German Business Morale Soars After Half a Year of Declines

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German business sentiment has improved at the start of the year, despite inflation, supply chain constraints and surging COVID-19 cases.

Source: Ifo Institute.

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The Ifo business-climate index rose to 95.7 points in January from 94.8 points in December. The increase comes after six consecutive decreases of the indicator after it reached a peak of 101.8 in June.

The companies surveyed argued the current situation was somewhat worse than the prior month. But the expectations for the coming six months increased significantly.

Clemens Fuest President Ifo stated that the German economy is beginning the new year with a lot of optimism.

The manufacturing sector made significant improvements upwards, easing supply constraints for preliminary products and raw materials. Ifo’s capitalization utilization improved from 84.9% to 85.6%.

In the service sector, the business climate index improved again after three consecutive declines. The tourism industry was leading in a positive outlook for the sector.

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