| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Business Climate | 86.8 | 85.7 | 87.3 | 87.4 |
| Current Conditions | 89.9 | 89.0 | 91.3 | 91.4 |
| Business Expectations | 83.6 | 82.6 | 83.5 | 83.6 |
Highlights
Once again, Ifo's August survey found business sentiment deteriorating more rapidly than expected. At 85.7, the headline index was down 1.7 points versus its marginally firmer revised July mark to record its fourth fall in as many months. The measure now stands at its lowest level since October last year.
Current conditions shed 2.4 points to 89.0, their fifth straight drop and the worst reading since August 2020. Expectations declined a smaller 1.0 point, but this was their fourth successive decrease and, at 82.6, a 9-month trough.
In line with July, at a sector level sentiment deteriorated across the board. Hence, there were fresh losses in manufacturing (minus 16.6 after minus 13.9), services (minus 4.2 after 1.0), trade (minus 25.5 after minus 23.7) and construction (minus 29.3 after minus 24.6).
The August results increase the likelihood of GDP growth turning negative again this quarter. Moreover, with the German ECDI now at minus 39 and the ECDI-P at minus 45, today's report also shows that economic activity in general is falling well short of market expectations.
Current conditions shed 2.4 points to 89.0, their fifth straight drop and the worst reading since August 2020. Expectations declined a smaller 1.0 point, but this was their fourth successive decrease and, at 82.6, a 9-month trough.
In line with July, at a sector level sentiment deteriorated across the board. Hence, there were fresh losses in manufacturing (minus 16.6 after minus 13.9), services (minus 4.2 after 1.0), trade (minus 25.5 after minus 23.7) and construction (minus 29.3 after minus 24.6).
The August results increase the likelihood of GDP growth turning negative again this quarter. Moreover, with the German ECDI now at minus 39 and the ECDI-P at minus 45, today's report also shows that economic activity in general is falling well short of market expectations.
Market Consensus Before Announcement
The business climate index missed expectations for a fourth time in a row in July, falling from 88.6 in June to 87.3 and missing expectations for 88.0. Forecasters see a half point loss to 86.8 for August.
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.
