| Actual | Previous | Revised | |
| Business Climate | 88.6 | 87.6 | |
| Current Conditions | 86.7 | 85.7 | |
| Business Expectations | 90.5 | 89.5 | 89.6 |
Highlights
Germany's February business sentiment data signals a fragile but broadening recovery narrative. The rise in the business climate index to 88.6 from 87.6 suggests firms are shifting from defensive positioning toward cautious operational normalisation. Importantly, the improvement is not driven solely by expectation; it is anchored in better assessments of current conditions, suggesting that demand and activity may already be stabilising in parts of the real economy.
Sectoral divergence reveals underlying structural dynamics. Manufacturing shows tangible momentum, with stronger production planning and orders, suggesting industrial activity could lead the recovery cycle despite softer expectations. Services display confidence-led optimism, especially in logistics, which often acts as a forward indicator of trade and supply-chain throughput.
Trade, however, remains the weak link since declining retailer sentiment suggests household consumption is still constrained, likely reflecting residual inflation pressure or cautious consumer behaviour. Construction's steady improvement indicates investment sentiment is firming, though sluggish order recovery signals that financing conditions or project pipelines remain tight.
Overall, the latest update reveals an economy transitioning from stagnation to an early-cycle recovery, but one that remains dependent on sustained demand, credit conditions, and consumer confidence to sustain durable expansion.
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.