The ifo Institute’s business climate index rose by 0.7 points to 88.4 points, beating expectations.

While the 9,000 companies surveyed reported a downturn in their current economic situation, their assessment of future expectations rose significantly.

“Companies remain hopeful that the economy will pick up in the coming year,” said Clemens Fuest, president of the Munich-based institute.

Germany is struggling to recover from consecutive years of recession, with gross domestic product (GDP) expected to rise minimally in 2025.

In the trade and manufacturing sectors, the monthly report found improved expectations despite a worse current economic situation.

In services, the climate improved significantly, with positive responses on both current business and forecasts.

However, the index for Germany’s construction sector declined due to pessimistic expectations. “A lack of orders remains a key problem for the industry,” said Fuest.

dpa