ifo Business Climate Index Rises at Year-End

In the run-up to Christmas, sentiment among German executives has improved noticeably. The ifo Business Climate Index rose from 95.1 points1in November to 96.3 points in December. The indicator of the current situation rose. Expectations also improved. The German economy is heading into the New Year with more confidence. In manufacturing, the index recovered somewhat. This was due to companies’ considerably less pessimistic expectations. In contrast, their assessment of the current situation worsened a little. Planning still foresees production cutbacks. In addition, it is currently harder for companies to access credit. In the service sector, the indicator rose to its highest level of the past six months. Service providers were clearly more satisfied with their current situation. Meanwhile, cautious optimism returned concerning their business expectations. In trade, the business climate fell back. Traders were slightly more satisfied with the current situation. However, their expectations for the coming months deteriorated. In construction, the index declined once more owing to more pessimistic expectations. In contrast, companies’ assessment of their current business situation remained very upbeat.

Source and photo: ifo Institut