| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Business Climate | 88.2 | 87.3 to 88.5 | 87.6 | 88.1 | 88.0 |
| Current Conditions | 85.7 | 85.0 to 86.5 | 85.6 | 85.6 | |
| Business Expectations | 90.6 | 89.6 to 90.9 | 89.7 | 90.6 | 90.5 |
Highlights
Germany's business mood closed the year on a cautious, almost subdued note. The business climate index edged down to 87.6 in December, signalling that firms see little to cheer about as they look toward the first half of 2026. While views of current conditions held steady, expectations have softened, reinforcing a sense that the economy is drifting rather than turning a corner.
Manufacturing remains a central point of weakness. Falling new orders and plans to scale back production suggest that demand is not yet strong enough to sustain a recovery. Even though assessments of current conditions improved marginally, they remain at historically low levels, pointing to persistent structural and cyclical pressures.
Services have also slipped back into negative territory, reflecting weaker confidence among providers and reduced expectations across most segments. The standout performance of restaurants in December offers a rare bright spot, but it appears more seasonal than systemic.
Trade and construction add to the downbeat picture. Retailers' disappointment with Christmas sales underscores fragile consumer demand, while construction firms remain cautious despite slightly improved expectations. In summary, the latest data suggest an economy ending the year in a holding pattern, with resilience in pockets but no broad-based momentum.
Manufacturing remains a central point of weakness. Falling new orders and plans to scale back production suggest that demand is not yet strong enough to sustain a recovery. Even though assessments of current conditions improved marginally, they remain at historically low levels, pointing to persistent structural and cyclical pressures.
Services have also slipped back into negative territory, reflecting weaker confidence among providers and reduced expectations across most segments. The standout performance of restaurants in December offers a rare bright spot, but it appears more seasonal than systemic.
Trade and construction add to the downbeat picture. Retailers' disappointment with Christmas sales underscores fragile consumer demand, while construction firms remain cautious despite slightly improved expectations. In summary, the latest data suggest an economy ending the year in a holding pattern, with resilience in pockets but no broad-based momentum.
Market Consensus Before Announcement
Business climate expected almost flat at 88.2 versus 88.1 in the prior month. Current conditions seen at 85.7 versus 85.6 and expectations unchanged at 90.6 versus 90.6.
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.
