A rather unexciting May IFO report out of Germany this morning shows unchanged confidence compared to April. The headline business climate index printed 108.5 vs. 108.3 expected and 108.6 prior helped by a gain in the current assessment index. This index rose to 114.3 from 114 while the more important (forward-looking) expectations index dropped to 103 from 103.4 as expected.
A reading of 108.5 in the IFO business climate has historically been consistent with growth of more than 2 percent, but the euro area's largest economy only managed half that (1 percent) in Q1 compared to a year earlier. The annual growth rate is, however, expected to move higher and could well hit 2 percent in 2H'2015.