Germany’s Ifo Business Climate indicator rose to 86.7 in March 2025, its highest level since July, in line with market expectations.
German business morale hits eight-month high
Business sentiment improved as companies became more optimistic about the future (87.7 vs. 85.6 in February), following a historic debt agreement that eased strict fiscal rules to boost defense spending and establish a major infrastructure fund. Firms also reported a better assessment of the current business environment (85.7 vs. 85.0).
Sentiment improves across all sectors
Sentiment improved across all sectors, with manufacturers (-16.6 vs. -21.9) and trade (-23.7 vs. -26.2) showing reduced skepticism. Service providers (-1.1 vs. -4.3) benefited from increased confidence among architectural and engineering firms, while the construction sector (-24.6 vs. -27.4) saw gains due to a more favorable view of current conditions, despite ongoing challenges from weak order volumes.
