Germany's June business climate rose to 85.6, matching market forecasts.
After plunging in April to its lowest since Oct 2022, business sentiment has
continued a modest rebound from May into June, but the recovery remains limited
and the index sits in its weakest range since early 2025. The worst impact of
the Middle East shock appears to have eased as energy-price pressures abate,
providing short-term support to sentiment. Both the current assessment and
expectations components improved, offering some hope for an H2 pickup in the
German economy. However, stagflation risks persist: if the Strait of Hormuz
situation remains unchanged, the global economy will need to adapt to a new
normal, and that adjustment could keep euro-area activity under further pressure
before any sustained improvement.
