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Ifo: German Business Climate Improves in June amid Hopes of Easing Middle East Tensions

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Ifo: German Business Climate Improves in June amid Hopes of Easing Middle East Tensions

Business sentiment in Germany improved in June, with local companies becoming "less uncertain" over the current business environment amid hopes of easing geopolitical tensions in the Middle East.

The ifo business climate index edged up to 85.6 points from the revised 85 points in May, data from the economic research institute showed Wednesday. The latest reading was in line with market forecasts.

The current situation index came in at 87 points, up from the previous month's 86.1 points and the Investing.com consensus estimate of 86 points. The expectations indicator, which gauges companies' projections for the next six months, rose to 84.1 points from the revised 83.9 points earlier, against the expected 85 points.

"Interestingly, not only expectations but also the current assessment component improved in June. However, before getting overly enthusiastic, even with today's increase the Ifo index still remains below its pre-war level," ING said in a note. "Somehow, the German - and indeed the wider European - economy remains in a kind of twilight zone. Hard data will continue to show the fallout from the war in the Middle East and soaring energy prices, while soft data such as this morning's Ifo index, points to a return of optimism."

Ifo said sentiment among companies in the services industry improved, with the indicator rising to -5.1 points from -6.9 points, supported by a continued recovery in the transport and logistics sector.

The construction and trade industries also saw an improvement in business sentiment to -23.1 points and -26.7 points, respectively, from -24.1 points and -30 points amid less pessimistic expectations over the coming months.

In the manufacturing sector, the business climate index climbed to -12.8 points from -14.7 points. Companies' assessment of their current business situation turned slightly negative while expectations improved.

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