| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Business Climate | 85.5 | 85.5 | 85.2 | |
| Current Conditions | 87.0 | 86.9 | 87.0 | 86.9 |
| Business Expectations | 83.9 | 84.1 | 83.5 |
Highlights
Ifo's February survey suggests just a marginal improvement in economic conditions. At 85.5 the overall climate indicator was up 0.3 points versus January, in line with the market consensus but reversing only a portion of the previous month's unrevised 1.1 point drop. As such, the latest reading was the second lowest since October 2022 and historically still very weak.
Current conditions were unchanged at 86.9 and so remained at their lowest mark since July 2020. Expectations fared rather better, gaining 0.6 points to 84.1 although having fallen a cumulative 1.6 points in December/January, the rebound was only modest.
Amongst the main sectors, sentiment deteriorated in manufacturing (minus 17.4 after minus 15.8) and trade (minus 30.8 after minus 29.7) but improved in services (minus 4.1 after minus 4.8) and construction (minus 35.4 after minus 35.8).
All in all, the February results increase the chances of the German economy sliding into recession this quarter. Manufacturing is clearly leading the way lower but services are also struggling to keep their head above water and construction has been in the doldrums for some time. The near-term outlook remains grim and with today's update putting the German RPI at minus 9 and the RPI-P at minus 10, risks would seem to be slightly skewed to the downside.
Current conditions were unchanged at 86.9 and so remained at their lowest mark since July 2020. Expectations fared rather better, gaining 0.6 points to 84.1 although having fallen a cumulative 1.6 points in December/January, the rebound was only modest.
Amongst the main sectors, sentiment deteriorated in manufacturing (minus 17.4 after minus 15.8) and trade (minus 30.8 after minus 29.7) but improved in services (minus 4.1 after minus 4.8) and construction (minus 35.4 after minus 35.8).
All in all, the February results increase the chances of the German economy sliding into recession this quarter. Manufacturing is clearly leading the way lower but services are also struggling to keep their head above water and construction has been in the doldrums for some time. The near-term outlook remains grim and with today's update putting the German RPI at minus 9 and the RPI-P at minus 10, risks would seem to be slightly skewed to the downside.
Market Consensus Before Announcement
The business climate index has missed the consensus the last three reports. February's consensus is 85.5 which would be little changed from January's 85.2.
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.
