DE: Ifo Survey

Thu Mar 22 04:00:00 CDT 2018

Consensus Actual Previous Revised
Economic Sentiment 114.9 114.7 115.4
Current Conditions 125.7 125.9 126.3 126.4
Bus. Expectations 104.4 104.4 105.4

Ifo's March survey found a further modest deterioration in overall business sentiment. The headline climate indicator weighed in at slightly weaker than anticipated 114.7, a 0.7 point drop versus its unrevised February reading and its lowest print since April last year.

The headline fall reflected declines in both current conditions and expectations. The former index was off only 0.5 points at a still very solid 125.9, while the latter declined a full point to 104.4. Expectations have now decreased for four straight months and stand at their weakest mark since the start of 2017.

At a sector level, morale worsened in manufacturing (26.5 after 28.1) and, in particular, retail (4.7 after 11.1) but at least held steady in wholesale (20.7) and improved in construction (17.9 after 15.9).

Today's results are in keeping with the new flash PMI survey. Business activity looks to have slowed from historically very high rates in recent months and looks set to cool further near-term. Most worrying is the drop in retail sentiment. Household spending has underperformed for a while now the deterioration here warns that any pick-up may be a while off yet.

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.