DE: Ifo Survey

Tue Apr 24 03:00:00 CDT 2018

Consensus Actual Previous Revised
Economic Sentiment 102.7 102.1 114.7 103.3
Current Conditions 106.0 105.7 125.9 106.6
Bus. Expectations 99.5 98.7 104.4 100.0

Ifo's April business survey found further evidence of an ongoing deceleration in economic activity. The overall climate indicator weighed in at a lower than anticipated 102.1, down 1.2 points from its weaker revised March outturn and its lowest print since January 2017. Note that as of this month the survey has been expanded to include services and the latest and future results will not be directly comparable with earlier data which excluded this category.

The headline decline reflected falls in both the current conditions and expectations components. The former was off 0.9 points versus its revised March outturn at 105.7, its third fall in as many months and the weakest outcome in ten months. The latter was a sharper 1.3 points lower at 98.7, its first sub-100 reading since August 2016.

At a sector level, morale worsened across the board bar retail (19.8 after 18.3). Hence, manufacturing (24.0 after 27.3), construction (25.9 after 29.4) and wholesale (10.2 after 14.0) all posted losses.

Today's results are softer than Monday's flash PMI surveys but both reports point to a broad-based slowdown in German growth, led by the key manufacturing sector.

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.