Ifo's January business climate survey was a little more upbeat than anticipated. At 106.7 the headline sentiment indicator was 1.2 points above its December outcome, its third increase in as many months and its highest mark since July.
The overall improvement reflected gains in both the current conditions and expectations components. The former rose almost 2 points to 111.7, also its strongest level since July and its third straight monthly advance. The latter saw a more modest 0.3 point increase to 102.0, a 5-month high and similarly a third successive rise.
Amongst the major sectors, morale was significantly higher in manufacturing (best since August) and in retail (best since June) and also made some ground in wholesale. However, sentiment dipped in both construction and services.
Ifo suggested that the German economy is off to a good start in 2015 and pointed to the economic benefits of a weaker euro and falling oil prices. Today's results are broadly consistent with those of the January flash PMI survey released last week which also signalled a modest acceleration in overall business activity.
Published by the Ifo Institute, the Business Climate Index is closely watched as an early indicator of current conditions and business expectations in the German economy. The Institute surveys more than 7,000 enterprises on their appraisals of the business situation and their short-term planning.
The headline index has a good correlation with developments in overall GDP and so has a major influence in shaping views on how the national economy is performing. The main focus is the expectations index. It is generally published during the last week of the month for the current month with more detailed information available about a week later.
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