German business sentiment improves in April - Ifo

German business sentiment improved in April, according to a survey released on Wednesday by the Ifo Institute.

The business climate index rose to 89.4 from 87.9 in March, coming in above consensus expectations of 88.8.

The current situation index ticked up to 88.9 from 88.1, while the expectations index printed at 89.9 in April versus 87.7.

The manufacturing gauge improved to -8.5 from -9.9, while the service sector index came in at 3.2 versus 0.4

The index for trade was -22.0 in April compared to -22.9 the month before, while the construction gauge rose to -28.5 from -33.2.

Capital Economics said: "The Ifo current conditions index, which has a better relationship with GDP than the BCI, still points to GDP contracting sharply. But other data released in the past few weeks suggest Germany may be coming out of recession.

"The composite PMI is now in expansionary territory and monthly activity data are consistent with a small rise in GDP in Q1. (Data due next Tuesday.) That said, all indicators are still quite weak by past standards.

"We still wouldn’t rule out a small contraction in GDP this year and think that any growth will be subdued as stagnant real incomes, weak external demand and tight fiscal policy will continue to weigh on activity."