German business sentiment improves again in March - Ifo

German business sentiment unexpectedly improved again in March, according to a survey released on Monday by the Ifo Institute.

The business climate index rose to 93.3 from 91.1 in February, coming in above consensus expectations of 91.0. This marked the fifth monthly increase in a row.

Meanwhile, the expectations gauge ticked up to 91.2 from 88.4 and the current situation index printed at 95.4 in March, up from 93.9 the month before.

The manufacturing index shot up to 6.6 in March from 1.5 in February, while the service sector gauge improved to 8.9 from 1.3. The index for trade ticked up to -10.0 from -10.6, while the construction gauge came in at -17.9, up from -19.0.

Ifo Institute president Clemens Fuest said: "Sentiment improved considerably, especially in key areas of manufacturing such as the automotive, chemical, electrical and electronics, and machinery and equipment industries."

Andrew Kenningham, chief Europe economist at Capital Economics, said: "The fifth successive monthly increase in the Ifo business climate index in March suggests that Germany is still benefitting from falling energy prices and easing supply problems and has yet to feel the full effects of tightening monetary conditions.

"A recession may be averted in Q1 but we suspect the economy will contract again later this year."