DE: Ifo Survey

Tue Dec 19 03:00:00 CST 2017

Consensus Actual Previous Revised
Economic Sentiment 117.6 117.2 117.5 117.6
Current Conditions 124.7 125.4 124.4 124.5
Bus. Expectations 110.7 109.5 111.0

Ifo's new survey shows no significant change in business conditions this month.

The headline climate index weighed in at 117.2, a 0.4 point drop versus November and on the soft side of the market consensus but still its second strongest mark since the Great Recession. The decline reflected a fall in expectations that more than offset an increase in current conditions. The former were off 1.5 points at 109.5, their first decrease in three months. By contrast, current conditions increased 0.9 points to 125.4, their best reading since July.

At a sector level, morale was up in construction (18.9 after 17.2) and retail (15.7 after 13.1) but worsened in manufacturing (31.7 after 33.1) and wholesale (22.5 after 25.0). However, all measures were close to their yearly highs.

Despite the headline dip, taken together with December's robust (flash) PMI composite output index (58.7), today's Ifo results point to a very healthy end to what has been a surprisingly good 2018 for the German economy. Fourth quarter GDP growth looks on course to match the solid 0.8 percent quarterly gain recorded in July-September.

Published by Munich's Ifo Institute, the Business Climate Index is closely watched as an early indicator of morale in German industry. In addition to overall gauge of sentiment, data are provided on its two components, current conditions and expectations. As a forward looking indicator, the latter is normally seen as the more important. Ifo surveys more than 7,000 enterprises in manufacturing, construction, wholesaling and retailing and a separate estimate of sector confidence is supplied for each.

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.