Germany grew 0.7 percent in the first three months of the year, helping pull the eurozone to growth of 0.5 percent.
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Analysts had expected the economy to lose steam over the summer months, but the Ifo index for May, released on Wednesday, suggested that any slowdown could be very limited.
Elsewhere, the forward-looking consumer sentiment index rose to 9.8 in June from 9.7 in May, the market research group GfK said. “After an economic cooling in spring, due to the unusually strong first quarter, we can expect the economic upswing to gain pace again”. This was the highest reading since December 2015 and above the expected score of 106.8.
The latest German IFO index was stronger than expected for May as it rose to 107.7 points on expectations of a rise of 106.9 points as companies expressed content in the current business outlook, and saw healthy growth in the German economy.
The rise in the headline figure was driven by improved sentiment in all four main sectors of the index, namely manufacturing, construction, wholesaling and retailing. So IFO economic climate index for Germany in May is not promising.
He said private consumption would remain an important pillar of the domestic economy, but warned of a number of imponderables such as the outcome of the June 23 referendum on European Union membership in the UK.
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“This result fits surprisingly well with the opinion voiced by the experts in the World Economic Survey (WES) of the Ifo Institute”, Niklas Potrafke, head of the Ifo center for public finance and political economy, said.
