DE: Ifo Survey

Fri May 25 03:00:00 CDT 2018

Consensus Actual Previous Revised
Economic Sentiment 102.0 102.2 102.1 102.2
Current Conditions 105.5 106.0 105.7 105.8
Bus. Expectations 98.5 98.5 98.7

Ifo's latest survey points to no significant change in business conditions this month. At 102.2, the overall climate indicator was flat at its marginally firmer revised April reading and just slightly stronger than the market consensus. This was the first month in 2018 that it has not fallen.

The stability of the headline index reflected a minor improvement in current conditions offset by a limited downgrading in expectations. The former sub-index rose 0.2 points to 106.0, its first increase since January but still the second lowest reading of the year. Expectations were off 0.2 points at 98.5, extending the monthly run of declines that began back in December.

Ifo's May findings are a little more optimistic than the flash PMIs which pointed to a broad-based deceleration in economic activity this month. Still, with what looks to have been a poor April already in the bag, both surveys suggest that second quarter German GDP is not shaping up well.

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.