The ifo institute's business climate index for Germany held steady at 102.2 in May after falling for five straight months, suggesting the country's economic growth could pick up in the second quarter.
The current situation index improved to 106.0 from 105.8 in April, but the expectations index fell for the sixth consecutive month, to 98.5 from 98.7.
"After weeks and months of disappointing data from Germany and the entire Eurozone, today's Ifo reading brings some relief. However, the fact that no change is already good news also shows how sharp expectations for the entire Eurozone have been revised downwards recently," said Carsten Brzeski, chief economist at ING Germany.
Business climate improved in services and trade and reached a new record high in construction. But the index for manufacturing declined as expectations continued to weaken, the ifo Institute for Economic Research said.
"The Ifo survey provides some hope that a pick-up in GDP growth is on the cards in Q2," said Stephen Brown, European economist at Capital Economics. Brown said GDP growth could increase to 0.4% or 0.5% in the second quarter, but growth in 2018 as a whole is expected to be about 2%, compared with previous expectations of 2.5%.
The country's GDP grew 0.3% in the first quarter, following a 0.6% expansion in the fourth quarter of 2017.
