| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Business Climate | 90.3 | 89.3 | 89.4 | 89.3 |
| Current Conditions | 89.9 | 88.3 | 88.9 | |
| Business Expectations | 90.5 | 90.4 | 89.9 | 89.7 |
Highlights
Ifo's May survey found business sentiment unchanged from April. At 89.3, the overall climate indicator was in line with the previous month's reading but a full point short of the market consensus. This left the gauge matching its highest mark since May last year but was the first month since January that confidence has not improved.
Current conditions actually deteriorated, shedding 0.6 points to 88.3. This was their first drop since February but only a 2-month low. Consequently, overall sentiment would have declined but for another rise in expectations. The sub-index here was up 0.7 points at 90.4, its fourth straight gain and a 13-month high. Expectations have now climbed 7 points since January.
Amongst the main sectors, sentiment improved further in manufacturing (minus 6.2 after minus 8.6), trade (minus 16.9 after minus 22.0) and construction (minus 26.0 after minus 28.9). However, services (1.8 after 3.2) worsened for the first time since January.
Today's slightly disappointing results are rather more downbeat than the flash PMI report released last week. Still both surveys suggest that the German economy is on the path to recovery, albeit probably quite slowly. The May data trim the German RPI to minus 1 and the RPI-P to 3, both measures showing economic activity performing much as forecast.
Current conditions actually deteriorated, shedding 0.6 points to 88.3. This was their first drop since February but only a 2-month low. Consequently, overall sentiment would have declined but for another rise in expectations. The sub-index here was up 0.7 points at 90.4, its fourth straight gain and a 13-month high. Expectations have now climbed 7 points since January.
Amongst the main sectors, sentiment improved further in manufacturing (minus 6.2 after minus 8.6), trade (minus 16.9 after minus 22.0) and construction (minus 26.0 after minus 28.9). However, services (1.8 after 3.2) worsened for the first time since January.
Today's slightly disappointing results are rather more downbeat than the flash PMI report released last week. Still both surveys suggest that the German economy is on the path to recovery, albeit probably quite slowly. The May data trim the German RPI to minus 1 and the RPI-P to 3, both measures showing economic activity performing much as forecast.
Market Consensus Before Announcement
The business climate index improved more quickly than expected in April, rising 1.5 points to 89.4. May's consensus is a nearly 1 point further gain to 90.3.
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.
