Germany's business sentiment holds steady in May

FRANKFURT — Germany's closely watched index of business optimism held steady in May, a reassuring sign for the eurozone's largest economy amid turbulence from debt crises in Greece, Portugal and Ireland.

The Ifo index came in at 114.2 on Tuesday, unchanged from April after a slight cooling the previous two months. Markets had expected 113.7 and the stronger than anticipated reading sent the euro higher.

The indicator measures how German business executive feel about the current state and future of Europe's largest economy. Germany has benefited from an export surge and improving consumer demand even as the eurozone struggles to keep its weaker members on the currency zone's fringe from defaulting on their debts.

German businesses think export growth will continue to boost the economy, the survey showed. One half of the survey — the assessement of how things are now — rose and the other half — expectations for the next six months — was down a bit but still positive.

"The business cycle traffic lights still signal 'green,'" Ifo Institue head Hans-Werner Sinn said in a statement.

Manufacturers are slightly less optimistic than before "but still assess the current busines situation as very good," Sinn said. "They also continue to see great opportunities from export business. Firms plan to clearly increase staff levels although not at the pace of last month."

Meanwhile the climate for retailers has improved, with consumers more willing to spend because unemployment remains relatively low.