“Concerns are easing, but the economy is lacking momentum”: This is how Ifo boss Clemens Fuest comments on the slightly improved Ifo business climate.
The index rose minimally to 93.6 points in April. The increase was driven by improved corporate expectations. On the other hand, they assess their current situation somewhat more negatively.
The Ifo index is one of the most important leading indicators for the economy in Germany over the next six months.
“The concerns of German companies are easing, but the economy is lacking momentum” This is how Ifo President Clemens Fuest comments on the renewed improvement in the Ifo index for the business climate. However, the leading indicator for the economy rose only slightly in April from 93.2 to 93.6 points. This was the sixth increase in a row. On average, a slightly stronger increase to 94 points had been expected on the markets.
The Ifo-Index is based on a survey of around 9,000 companies. It is an important leading indicator for the economy over the next six months. Another important leading indicator, the ZEW economic expectations, had recently fallen again.
The index of the Ifo Institute is made up of two components, the assessment of the current situation and the expectations of companies. The increase was driven by better expectations. The index value for economic expectations rose from 91.0 to 92.2 points. In contrast, companies assessed their current situation somewhat more negatively. This sub-index fell from 95.4 to 95.0 points.
Mood is better, but far from good
All values are still below the neutral value of 100 points. The mood in the economy is better than it was months ago, but it’s still a long way from being good. The fear of a real recession as a result of the Ukraine war has largely disappeared. On the other hand, there is growing concern that the German economy will remain stuck in stagflation, i.e. stagnation in economic output coupled with persistently high inflation.
In manufacturing, the climate index rose slightly. Better expectations contrasted with a critical assessment of the current situation. Production is to be expanded in the coming months. Capacity utilization rose from 84.3 to 84.5 percent and is thus above the long-term average of 83.6 percent.
In the service sector, the upward trend of recent months ended in April. The service providers assessed their current situation somewhat worse. In addition, pessimism about the coming months increased again for the first time.
The index also fell slightly in trading. The traders appeared somewhat less satisfied with the current situation. On the other hand, the pessimism in the expectations continued to decrease. Due to weak sales development, many retailers are still reluctant to order goods.
In construction, the business climate indicator rose despite the construction crisis. Expectations for the coming months have improved, but concerns remain high. The assessment of the current situation fell to its lowest level since December 2015.
read too
