The Ifo Institute said on Tuesday that German business morale improved more than expected in August as both manufacturing and services picked up steam.

“Sentiment among German business leaders is continuing to improve,” said Ifo Institute president Clemens Fuest in a statement.

“The Ifo Business Climate Index rose from 90.4 points (seasonally adjusted) in July to 92.6 points in August.

“Companies assessed their current business situation markedly more positively than last month.

“Their expectations were also slightly more optimistic.

“The German economy is on the road to recovery.”

In manufacturing, the business climate improved considerably.

Companies’ assessments of their current situation jumped higher.

Nevertheless, many industrial companies still consider their current business to be “poor.”

The outlook for the coming months was again optimistic. Order books are filling once more.

In the service sector, the Business Climate Index rose strongly.

Service providers were decidedly happier with their current business situation. Their outlook for the coming six months also improved further.

In trade, the upward trend in the business climate flattened noticeably.