German Business Sentiment Rebounds on Brighter Hopes for Economy — Update

By Ed Frankl

German business confidence rose a little in October, a monthly survey of firms showed, driven by companies' expectations that the economy will gain momentum next year.

The Ifo Institute said Monday that its business-climate index, based on around 9,000 monthly responses from businesses, rose to 88.4 in October from 87.7 in September. Economists polled by The Wall Street Journal expected 87.9.

The uptick continues the steady increase in the Ifo index since the start of the year that was only briefly interrupted by a decline in September. It didn't reach August's level of 88.9, however.

Sentiment rose due to improved expectations, though the current business situation was assessed as slightly worse, the Ifo Institute said.

"Companies remain hopeful that the economy will pick up in the coming year," Ifo President Clemens Fuest said.

The services sector drove much of the increase this month, although partly due to a reversal of the significant decline in September. Manufacturing and trade sentiment also improved, but construction retreated slightly, the survey said.

The increase matched data from the purchasing managers index last week, which showed the fastest private-sector activity growth in more than two years.

"Despite the many macroeconomic disturbances, companies expect a clear improvement in the economic situation in the coming months," Dirk Schumacher, chief economist at KfW bank, said in a note to clients.

"Since expectations sometimes have the character of a self-fulfilling prophecy, this is clearly positive news," he added.

Stronger sentiment news might contrast with more subdued hard data, however. On Thursday, Germany's data agency publishes German growth for the third quarter of the year, which is expected to stagnate after the contraction in the second quarter.

Write to Ed Frankl at edward.frankl@wsj.com

(END) Dow Jones Newswires

October 27, 2025 07:24 ET (11:24 GMT)