| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Business Climate | 85.1 | 85.7 | 85.7 | 85.8 |
| Current Conditions | 87.8 | 88.7 | 89.0 | |
| Business Expectations | 82.8 | 82.9 | 82.6 | 82.7 |
Highlights
Ifo's September survey again paints a downbeat picture of overall business activity although at least the headline and component data were on the firm side of the market consensus. At 85.7 the climate indicator was just 0.1 point short of its marginally upwardly revised August print and 0.6 points higher than anticipated. Even so, this was still its weakest reading since last October.
Current conditions fell 0.3 points to 88.7, their sixth straight decline and their lowest mark since August 2020. By contrast, expectations edged up 0.2 points to 82.9, their first increase since April but still their second worst outturn since November 2022.
At a sector level sentiment was mixed. Hence, while there were modest gains in manufacturing (minus 16.4 after minus 16.6) and trade (minus 25.0 after minus 25.6), services (minus 5.0 after minus 4.1) and construction (minus 31.3 after minus 29.8) both recorded fresh losses.
The September Ifo results are somewhat softer than the flash PMIs but both surveys suggest that the rate of deterioration in business conditions is at least beginning to stabilise. Nonetheless, there is nothing here that suggests much of a recovery in the fourth quarter after a probable contraction in GDP in the current period. That said, with the German RPI now at 16 and the RPI-P at 17, today's report at least shows economic activity in general running a little ahead of market expectations.
Current conditions fell 0.3 points to 88.7, their sixth straight decline and their lowest mark since August 2020. By contrast, expectations edged up 0.2 points to 82.9, their first increase since April but still their second worst outturn since November 2022.
At a sector level sentiment was mixed. Hence, while there were modest gains in manufacturing (minus 16.4 after minus 16.6) and trade (minus 25.0 after minus 25.6), services (minus 5.0 after minus 4.1) and construction (minus 31.3 after minus 29.8) both recorded fresh losses.
The September Ifo results are somewhat softer than the flash PMIs but both surveys suggest that the rate of deterioration in business conditions is at least beginning to stabilise. Nonetheless, there is nothing here that suggests much of a recovery in the fourth quarter after a probable contraction in GDP in the current period. That said, with the German RPI now at 16 and the RPI-P at 17, today's report at least shows economic activity in general running a little ahead of market expectations.
Market Consensus Before Announcement
The business climate index missed expectations for a fifth month in a row in August, falling from 87.4 in July to 85.7 versus expectations for 86.8. Forecasters see 85.1 for September.
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.
