| Actual | Previous | Revised | |
|---|---|---|---|
| Business Climate | 89.0 | 88.6 | |
| Current Conditions | 86.4 | 86.5 | |
| Business Expectations | 91.6 | 90.7 | 90.8 |
Highlights
Germany's business sentiment showed a modest lift in August, with the business climate index edging up to 89.0 from 88.6 in July, about 0.7 points above the consensus forecast for Germany. The uptick reflects improved expectations among firms, though assessments of current conditions slipped, underscoring that the broader recovery remains fragile.
Manufacturing sentiment weakened slightly as firms reported softer business conditions and no growth in orders, though capital goods producers offered a brighter note with improved outlooks. In services, business conditions improved, but caution grew over the months ahead, with architecture and engineering firms bucking the trend with more substantial confidence. Trade sentiment declined, weighed down by weaker performance, though future expectations were less bleak. Construction, after a long period of stability, saw its index dip as current satisfaction fell, but companies' forward-looking outlook improved.
Overall, the latest report paints a picture of a tentative and uneven recovery. While expectations are cautiously shifting upward, the drag from subdued orders and mixed sectoral dynamics continues to restrain momentum. The latest update takes the RPI to minus 25 and the RPI-P to minus 31, meaning that economic activities continue to pace behind the expectations of the German economy.
Manufacturing sentiment weakened slightly as firms reported softer business conditions and no growth in orders, though capital goods producers offered a brighter note with improved outlooks. In services, business conditions improved, but caution grew over the months ahead, with architecture and engineering firms bucking the trend with more substantial confidence. Trade sentiment declined, weighed down by weaker performance, though future expectations were less bleak. Construction, after a long period of stability, saw its index dip as current satisfaction fell, but companies' forward-looking outlook improved.
Overall, the latest report paints a picture of a tentative and uneven recovery. While expectations are cautiously shifting upward, the drag from subdued orders and mixed sectoral dynamics continues to restrain momentum. The latest update takes the RPI to minus 25 and the RPI-P to minus 31, meaning that economic activities continue to pace behind the expectations of the German economy.
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.
