Business sentiment in Germany rebounded in March after declining for six consecutive months, with improvements in firms' assessment of both the current situation and future outlook, survey data from the ifo Institute showed.

The ifo Institute's seasonally adjusted business climate index for Germany rebounded to 99.6 points in March from the upwardly revised 98.7 points in the previous month, beating Econoday's consensus estimate of 98.6 points.

The current business situation index edged up to 103.8 in March from the upwardly revised 103.6 in the prior month, while the expectations index rose to 95.6 from February's upwardly revised 94.0 reading, reflecting a slight improvement in survey participants' assessment of the business outlook as the German economy remains resilient.

Business climate weakened for the seventh consecutive month in the manufacturing sector, with the relevant index falling to 6.6 in March from an upwardly revised 9.1 in the prior month. The expectations index declined to a level not reached since November 2012, reflecting zero expectations of an improvement in production amid falling demand.

Earlier, data from IHS Markit showed a deeper contraction in Germany's manufacturing sector in March.

Meanwhile, service sector business climate for the month improved, with the relevant index rising to 26.0 from an upwardly revised 21.3 in February, primarily driven by more optimistic expectations by service providers, who anticipate further improvement in their already conducive business situation.

Improved current business situation also drove the business climate index in the construction sector, which climbed to 20.3 points in March from a downwardly revised 18.0 in February, reversing a downward trend from the past four months.

Retailers and wholesalers also noted an improvement in the current business climate as the relevant index climbed to a level not reached since May 2018. The business climate index for trade rose to 8.2 points from February's 4.9 points.