| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Business Climate | 88.0 | 87.3 | 88.5 | 88.6 |
| Current Conditions | 93.0 | 91.3 | 93.7 | |
| Business Expectations | 83.2 | 83.5 | 83.6 | 83.8 |
Highlights
Ifo's July survey was again on the soft side of the market consensus as surprisingly weak current conditions more than offset an unexpectedly small decline in expectations. At 87.3, the headline sentiment index was down from a marginally firmer revised 88.6 in June to hit its weakest level since last November. The measure has now fallen for three consecutive months.
Current conditions shed 2.4 points to 91.3, their fourth straight drop and the lowest reading since February 2021. Expectations also lost ground but, at 83.5, only 0.3 points. That said, this gauge has now fallen 8.4 points since March and now stands at a 7-month trough.
In line with June, at a sector level sentiment deteriorated across the board, notably in manufacturing (minus 14.2 after minus 9.7). Services (0.9 after 2.7), trade (minus 23.7 after minus 20.2) and construction (minus 24.0 after minus 20.5) all lost ground too.
Today's disappointingly weak results mirror the flash PMI findings released yesterday and suggest that any recovery in economic growth is anaemic at best. Manufacturing in particular clearly remains in the doldrums. The latest update puts the German ECDI at minus 12 and the ECDI-P at minus 21. Both measures have been consistently in negative surprise territory since mid-June.
Current conditions shed 2.4 points to 91.3, their fourth straight drop and the lowest reading since February 2021. Expectations also lost ground but, at 83.5, only 0.3 points. That said, this gauge has now fallen 8.4 points since March and now stands at a 7-month trough.
In line with June, at a sector level sentiment deteriorated across the board, notably in manufacturing (minus 14.2 after minus 9.7). Services (0.9 after 2.7), trade (minus 23.7 after minus 20.2) and construction (minus 24.0 after minus 20.5) all lost ground too.
Today's disappointingly weak results mirror the flash PMI findings released yesterday and suggest that any recovery in economic growth is anaemic at best. Manufacturing in particular clearly remains in the doldrums. The latest update puts the German ECDI at minus 12 and the ECDI-P at minus 21. Both measures have been consistently in negative surprise territory since mid-June.
Market Consensus Before Announcement
The business climate index fell an unexpectedly steep 3 points in June to 88.5. Forecasters see 88.0 for July.
Definition
Ifo is an acronym from Information and Forschung (research). 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 9,000 enterprises in manufacturing, services, construction, wholesaling and retailing and a separate estimate of sector confidence is supplied for each.
Description
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.
