| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Business Climate | 85.9 | 86.9 | 85.7 | 85.8 |
| Current Conditions | 88.5 | 89.2 | 88.7 | |
| Business Expectations | 83.3 | 84.7 | 82.9 | 83.1 |
Highlights
Ifo's October survey was again on the firm side of the market consensus. At 86.9 the climate indicator was 1 point firmer than expected and up 1.1 points versus its marginally firmer revised September mark. The latest reading was also a 3-month high, but historically still very soft.
Current conditions gained 0.5 points to reach 89.2, similarly the strongest outturn since July and their first increase since April. Expectations advanced a larger 1.6 points to 84.7, their second consecutive rise and their best mark since May.
At a sector level sentiment was mixed. Hence, while there were modest gains in manufacturing (minus 15.9 after minus 16.2), construction (minus 31.3 after minus 31.2) and a more marked improvement in services (minus 1.5 after minus 4.9), trade (minus 27.2 after minus 25.0) posted another loss.
The October Ifo results are still weak but rather less so than the flash PMI survey released yesterday. Nonetheless, both reports increase the likelihood of Germany falling into recession which, while bad news for prospective employment, should at least help to accelerate the decline in inflation. That said, with the German RPI now at minus 6 and the RPI-P at 2, economic activity in general is running much as the forecasters predicted.
Current conditions gained 0.5 points to reach 89.2, similarly the strongest outturn since July and their first increase since April. Expectations advanced a larger 1.6 points to 84.7, their second consecutive rise and their best mark since May.
At a sector level sentiment was mixed. Hence, while there were modest gains in manufacturing (minus 15.9 after minus 16.2), construction (minus 31.3 after minus 31.2) and a more marked improvement in services (minus 1.5 after minus 4.9), trade (minus 27.2 after minus 25.0) posted another loss.
The October Ifo results are still weak but rather less so than the flash PMI survey released yesterday. Nonetheless, both reports increase the likelihood of Germany falling into recession which, while bad news for prospective employment, should at least help to accelerate the decline in inflation. That said, with the German RPI now at minus 6 and the RPI-P at 2, economic activity in general is running much as the forecasters predicted.
Market Consensus Before Announcement
The business climate index, at 85.7, held steady in September and, at a consensus 85.9, is expected to once gain in October.
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.
