Ifo's new business climate survey points to little change in overall economic conditions this month. At 108.5 the headline sentiment index was down just a tick from its April mark, its first decline in seven months but still marginally firmer than the market consensus.
The lack of volatility in the composite measure reflected a modest 0.3 point rise in current conditions to 114.3, its third straight gain and its highest reading since June last year, and a 0.4 point decline in expectations to 103.0. The dip expectations followed a 0.5 point slide in April and left the component at a 3-month low.
Amongst the major sectors morale weakened in manufacturing (13.6 from 14.1) and wholesale (9.8 from 12.7) but rose in construction (minus 4.9 from minus 5.2) and retail (6.9 from 2.6). The unadjusted service sector index was nearly 3 points higher at 25.8.
Today's Ifo results are rather more upbeat than those of the flash PMIs released yesterday but both reports warn that the anticipated pick-up in economic growth this quarter does not seem to be materialising. The economy remains firmly on an expansion path but confidence in the outlook has slipped on the back of slowing demand.
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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