Germany’s Ifo Business Climate Index edged up to 90.2 in October 2026, its highest level since May 2023, slightly above market expectations of 90.0. The improvement was driven by more optimistic business expectations, which rose to 91.6 from 90.4 in September, suggesting that the economic recovery is gaining momentum despite an energy price shock that has pushed fuel costs to record highs. However, companies assessed their current business conditions less favorably, with the corresponding index falling to 88.8 from 89.5. By sector, manufacturing sentiment returned to positive territory for the first time in more than three years, rising to 1.2 from -2.7 as incoming orders increased and firms planned to expand production. Construction sentiment also improved to -15.5 from -17.0. Meanwhile, trader confidence remained unchanged at -17.2, while sentiment in the services sector turned negative, falling to -1.2 from 0.7 as companies grew less satisfied with current business conditions.