BERLIN, Oct 25 Reuters Morale among German businesses edged up for the first time in six months in October, a leading survey showed on Wednesday, but their mood remained subdued and economists say a second recession inside a year still seems likely.

The Ifo institute said its business climate index stood at 86.9, beating a forecast of 85.9 by analysts in a Reuters poll and September39;s slightly revised reading of 85.8.

Companies were somewhat more satisfied with the current business situation and managers were also less pessimistic about the coming months, the survey showed.

Ifo president Clemens Fuest said Wednesday39;s reading showed the economy, which shrank in the last quarter of 2022 and the first quarter of 2023, can see a silver lining ahead.

But several economists were less upbeat.

It39;s difficult to see a ray of hope, said Alexander Krueger, chief economist at Hauck Aufhaeuser Lampe Privatbank, forecasting a recession in the second half of the year.

The Middle East conflict is likely to have put a brake on expectations, Krueger said. Growth hopes remain buried for the next few months.

In late September, before the IsraelHamas conflict broke out, Germany39;s five leading economic institutes had forecast that Europe39;s largest economy would skirt a recession.

Joerg Kraemer, chief economist at Commerzbank, also suggested a recession was on the cards, with the low level of the Ifo index pointing to a second half contraction.

Kraemer did not expect a…