German companies' economic outlook improved in May amid easing trade tensions

The expectations index, calculated by the German institute Ifo, rose to 88.9 in May from 87.4 a month earlier. The gauge also exceeded the median estimate of experts polled by Bloomberg. They had anticipated a rise just to 88 points.

According to the news agency, German companies' economic outlook improved amid easing global trade tensions following the agreement between the United States and China. The upcoming increase in government spending also contributed to the index's growth, Bloomberg reports.

Ifo President Clemens Fuest says that the largest economy in Europe, although still stagnating, is slowly regaining its footing. In Q1 2025, Germany's GDP rose 0.2%. However, the annual performance is unlikely to change, as predicted by the experts.

Germany continues to see the negative effects of unpredictable US tariff policy. Private-sector activity unexpectedly declined in May. The country's services sector index reached its lowest level in 2.5 years, offsetting the positive dynamics in manufacturing, Bloomberg notes.