August's Ifo survey was slightly more optimistic than generally anticipated although overall economic conditions look to have been little changed from July.
Economic sentiment edged up just 0.3 points to 108.3, its second consecutive rise and its firmest reading since May. However, the latest print was still within the tight 107.5-108.7 range seen since March. The uptick here was attributable to a 0.9 point gain in current conditions which, at 114.8, posted their strongest level in more than a year. However, expectations dipped a tick to 102.2, and to all intents and purposes have been trending sideways since the start of 2015.
Morale deteriorated in manufacturing (11.0 after 11.4) and wholesale (13.2 after 14.1) but rose in construction (minus 2.9 after minus 4.4) and, in particular, retail (10.8 after 4.0). Unadjusted service sector confidence climbed from 26.0 in July to 30.6.
August's results would almost certainly look rather weaker had the survey been undertaken this week but stand broadly consistent with the findings of the flash PMIs released just last Friday. Both reports suggest that the German economic recovery remains on track but neither really points to any significant pick-up in momentum. In the wake of the latest round of turmoil in global financial markets, this is hardly reassuring.
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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