September's Ifo survey pointed to little change in overall business sentiment this month as weaker current conditions were just more than offset by a more bullish assessment of the economic outlook.
The headline index edged up just 0.2 points to 108.5, a little stronger than the market consensus but a small enough rise as to be statistically insignificant. Indeed, the measure has been within a tight 106.8-108.7 range since the start of the year.
However, the relative stability of the overall gauge masked slightly more volatile components. Hence, the current conditions sub-index fell 0.8 points to 114.0, its first decline in three months but still a tick above its July posting. Expectations on the other hand rose 1.1 points to 103.3, their highest mark since April although, again, comfortably within the range seen over the year to date.
At a sector level morale improved to multi-month highs in retail, construction and wholesale but slipped in manufacturing (lowest since February) and to a lesser extent, in services.
In line with the GfK survey released earlier today, the September Ifo results were collated before the Volkswagen emissions scandal broke. The subsequent slide in the DAX and more general worries about the potential damage it could cause to the economy will inevitably hit sentiment in the October report. Fourth quarter growth looked to be shaping up quite healthily but now the picture is a good deal more clouded.
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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