German business confidence improved for a sixth consecutive month in October, adding evidence that Europe’s largest economy may be gradually emerging from an extended period of weakness.
The Ifo Business Climate Index increased to 90.2 from 89.9 in September, exceeding the 90.0 reading expected by economists surveyed by Reuters. Business expectations climbed to 91.6, while companies’ assessment of current conditions weakened.
Manufacturing provided an important positive signal, with companies becoming more optimistic about future business conditions as incoming orders improved.
The recovery, however, remains uneven. Germany continues to contend with structural pressures including elevated energy costs, international trade uncertainty and competition facing its industrial sector.
The German government expects economic growth of 1.3% in 2026 and 1.1% in 2027.
For European markets, improving German sentiment strengthens the case that the industrial downturn may be easing. The critical test will be whether stronger expectations translate into sustained improvements in production, investment and employment.
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