The mood across German businesses improved modestly in June, with the ifo Business Climate Index rising to 88.4 points, up from 87.5 in May, signalling a fragile but growing confidence in the economy. The latest data, based on around 9,000 monthly responses, reveals a cautiously optimistic outlook among firms, particularly in services and construction, sectors closely linked to the furniture and interiors industry.
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'Sentiment among companies in Germany has improved,' reported the ifo Institute on 24 June 2025. 'The German economy is slowly building confidence.' While assessments of the current situation saw only a slight improvement, expectations for the coming six months brightened significantly.
In manufacturing, which includes furniture production, the climate improved marginally. 'While companies were noticeably more optimistic about the coming months, current business performance has been less favourable. Companies remain very dissatisfied with their order books.' This imbalance suggests continued pressure on supply chains and delayed purchasing decisions in sectors tied to home and interior design.
The service sector, which encompasses interior design consultancies, fit-out services, and logistics, showed the strongest improvement. 'Companies viewed their current situation somewhat more positively and significantly raised their expectations. This was especially true for business-related service providers.' This uplift reflects cautious hope that clients, private and commercial, may begin committing to postponed renovation and furnishing projects.
In trade, the picture is mixed. 'Traders were more satisfied with current business, and their expectations were less pessimistic. This improvement was driven by wholesale trade; however, the business climate in retail trade declined slightly.' Retailers of homeware and furnishings continue to face a challenging environment, squeezed by inflation and hesitant consumer spending.
Meanwhile, the construction sector, crucial to new housing and commercial projects that drive furniture demand, continues its upward trend. 'Expectations rose to their highest level since February 2022, though they remain marked by scepticism. Assessments of the current situation were unchanged.'
© ifo Institute
The ifo Business Climate Index serves as a key barometer of Germany's economic trajectory. With interior industry players spanning manufacturing, services, retail and construction, these latest figures provide cautious optimism. While structural challenges remain, the improved outlook, especially for future expectations, offers a welcome sign of recovery for interior-related sectors in the months ahead.
More information:
ifo Institute
www.ifo.de