BERLIN (Reuters) -German business morale stagnated in May, a survey showed on Monday, falling short of a forecast improvement and putting a stop to three consecutive months of increases.

The Ifo institute said its business climate index remained constant in May at 89.3, compared with a reading of 90.4 forecast by analysts in a Reuters poll.

Companies were less satisfied with the current business situation. Expectations, on the other hand, brightened.

Industry, trade and construction are recovering, while service providers are suffering a setback, the Ifo institute said.

"Germany's economy is working its way out of the crisis step by step," Ifo's president Clemens Fuest said.

The German economy grew by 0.2% in the first three months of 2024, the statistics office reported on Friday, confirming preliminary data.

In the second quarter, the economy may grow again, Ifo's head of survey Klaus Wohlrabe told Reuters.

"The upswing remains a fragile little plant," Wohlrabe said.

Although inflation is expected to continue its downward trend this year, Wohlrabe noticed that more companies want to raise their prices in the next three months.

The European Central Bank has all but promised a rate cut for the euro zone on June 6, but policymakers will debate the schedule for subsequent moves depending on progress made in sustainably bringing down inflation.