| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Business Climate | 86.0 | 85.0 to 86.7 | 85.7 | 86.5 |
| Current Conditions | 85.5 | 85.2 to 85.6 | 84.3 | 85.7 |
| Business Expectations | 87.0 | 86.0 to 87.5 | 87.2 | 87.3 |
Highlights
In November, the business climate index fell from 86.5 to 85.7, some 0.3 points below the consensus and reflecting a broad decline in confidence. The current situation index dropped 1.4 points to 84.3 while expectations eased just 0.1 point to 87.2.
Manufacturing and, in particular, services experienced a notable decline with companies reporting both current conditions and business expectations significantly worse.
In contrast, trade showed a modest rebound. The index rose, with better current conditions and less pessimistic expectations, though overall sentiment remains subdued. Retail and wholesale, while improving, still reflect cautious optimism. Construction presented a stark contrast with a noticeable decline in climate; companies expressed dissatisfaction with current business and growing scepticism about the future.
The November drop in the business climate warns that sentiment has fallen right across German business sectors and bodes ill for fourth quarter GDP. This latest update takes the RPI to minus 32 and the RPI-P to a lowly minus 52. This means that economic activities in general are falling well behind market expectations.
Manufacturing and, in particular, services experienced a notable decline with companies reporting both current conditions and business expectations significantly worse.
In contrast, trade showed a modest rebound. The index rose, with better current conditions and less pessimistic expectations, though overall sentiment remains subdued. Retail and wholesale, while improving, still reflect cautious optimism. Construction presented a stark contrast with a noticeable decline in climate; companies expressed dissatisfaction with current business and growing scepticism about the future.
The November drop in the business climate warns that sentiment has fallen right across German business sectors and bodes ill for fourth quarter GDP. This latest update takes the RPI to minus 32 and the RPI-P to a lowly minus 52. This means that economic activities in general are falling well behind market expectations.
Market Consensus Before Announcement
German business morale is expected to retreat in the November report with the business climate index at 86.0 after rising more than expected to 86.5 in October from 85.4 in September. Current conditions are seen at 85.5 and expectations at 87.0 in November, down from 85.7 and 87.3 in October, respectively.
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.
