German business confidence stronger than expected in July

German business confidence for July came in stronger than expected, according to a widely-followed survey.

The IFO Institute’s business climate index came in at 108.3, down from 108.7 the previous month but comfortably ahead of economists’ expectations for a reading of 107.5.

Meanwhile, the expectations index fell to 102.2 from 103.1 in June, beating expectations of 101.2, while the index of current conditions nudged up to 114.7 from 114.6, ahead of estimates of 114.0.

Capital Economics said the survey revealed little damage from the Brexit vote.

“The small fall in the headline Business Climate Indicator, from 108.7 to 108.3, was better than the consensus forecast of a fall 107.5 and our own expectation of a slightly sharper fall. At this level, the index points to annual GDP growth of close to 2%, consistent with quarterly gains in GDP of 0.5% or so. The index measuring current conditions even rose a little, suggesting that the weak tone of the hard data in Q2 may not be sustained into the third quarter.”

Meanwhile, Pantheon Macroeconomics said it was “an upside surprise consistent with the better-than-expected PMI data on Friday”.