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German, French business confidence signal cautious recovery

German, French business confidence signal cautious recovery

Business confidence in both Germany and France showed government support and ease of lockdown measures could boost recovery in the second half of the year.

The German Ifo institute business sentiment index signaled further improvement in June, as it soared to 86.2 from 79.7 in May, beating median forecasts of 85.0.

The expectations measure jumped to the highest level in four months at 91.4, compared to 80.5 last month. The current conditions also edged up to 81.3 from 78.9.

“German business sees light at the end of the tunnel,” Ifo chief Clemens Fuest said.

French business confidence rebounded strongly by adding 18 points to 78, the biggest rise on record, yet the measure is still far below the average of 100.

Purchasing Managers’ data released on Tuesday also showed that Europe’s biggest economies are cautiously recovering from the economic slump.

The French PMI readings returned to the growth zone above the 50 level, where the manufacturing index climbed to 52.1 in June from 40.6 in May and the service sector soared to 50.3 from 31.1.

As of 09:18 GMT, the euro dropped for the first time in three sessions versus the US dollar to 1.1283, with elevating fears for a second wave of corona infections after seven U.S. states reported marked increase in Covid-19 new cases.

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