Fra IFO.de
In manufacturing, the business climate index fell once again. While the indicator of the current situation is still above its long-term average, it has now been falling for over a year. As to business expectations, last month’s ray of light has disappeared. Industrial companies’ pessimism grew, due primarily to shrinking order books.
In the services, the business climate worsened, driven by noticeably less optimistic expectations. In contrast, service providers were more positive in their assessment of the current business situation.
In trade, the index rose. Companies were more satisfied with their current situation. They were also more confident about the coming months. For wholesalers, the improvement was stronger in the index of expectations; for retailers, it was the indicator of the current business situation that rose more.
In construction, the business climate index fell, but remains at a high level. Companies’ assessment of their current situation worsened. Their business expectations for the coming six months also fell.
Clemens Fuest
President of the ifo Institute
Monthly movements of the ifo Business Climate Index Germany can be transformed with the help of Markov Switching Models into probability statements for the two cyclical regimes expansion or contraction. The ifo Business Cycle Traffic Lights provides the monthly regime probabilities for the expansion phase. The probabilities signal an economic expansion (green lights) insofar as they exceed the 66% mark; contractions insofar as they are under the 33% mark (red lights); or indifference (yellow lights) when in the range in between. This indifference interval can be interpreted as a buffer zone between the regimes expansion and contraction, in which particularly great uncertainty exists about the state of the economy.
Increases in the dispersion measure signals greater uncertainty on the part of firms. Values can range from between 0 and 100. The measure is based on responses to questions related to expectations regarding the six-month business outlook and is generated from the dispersion of these expectations at any given time.
Monthly movements of the ifo Business Climate Index Germany can be transformed with the help of Markov Switching Models into probability statements for the two cyclical regimes expansion or contraction. The ifo Business Cycle Traffic Lights provides the monthly regime probabilities for the expansion phase. The probabilities signal an economic expansion (green lights) insofar as they exceed the 66% mark; contractions insofar as they are under the 33% mark (red lights); or indifference (yellow lights) when in the range in between. This indifference interval can be interpreted as a buffer zone between the regimes expansion and contraction, in which particularly great uncertainty exists about the state of the economy.
(Index, 2015 = 100, seasonally adjusted)
06/18 | 07/18 | 08/18 | 09/18 | 10/18 | 11/18 | 12/18 | 01/19 | 02/19 | 03/19 | 04/19 | 05/19 | 06/19 | |
Climate | 102.1 | 102.2 | 104.2 | 103.9 | 102.9 | 102.3 | 101.2 | 99.6 | 98.8 | 99.7 | 99.3 | 97.9 | 97.4 |
Situation | 105.4 | 106.4 | 107.4 | 107.4 | 106.4 | 106.2 | 105.4 | 104.7 | 103.9 | 104.1 | 103.5 | 100.7 | 100.8 |
Expectations | 98.9 | 98.2 | 101.0 | 100.5 | 99.4 | 98.6 | 97.2 | 94.8 | 94.0 | 95.6 | 95.3 | 95.2 | 94.2 |
Source: ifo Business Survey.
© ifo Institute
ifo Business Climate Germany and by Sector
(Balances, seasonally adjusted)
06/18 | 07/18 | 08/18 | 09/18 | 10/18 | 11/18 | 12/18 | 01/19 | 02/19 | 03/19 | 04/19 | 05/19 | 06/19 | |
Germany | 23.2 | 23.5 | 27.7 | 27.2 | 24.9 | 23.8 | 21.3 | 17.8 | 16.0 | 18.0 | 17.1 | 14.1 | 13.0 |
Manufacturing | 24.2 | 23.0 | 24.3 | 23.7 | 18.9 | 18.0 | 15.0 | 11.4 | 9.2 | 6.7 | 4.1 | 3.9 | 1.5 |
Service Sector | 26.3 | 28.1 | 33.3 | 33.6 | 31.9 | 31.6 | 27.6 | 25.0 | 21.7 | 26.4 | 26.5 | 21.0 | 20.0 |
Trade | 10.9 | 10.8 | 10.9 | 11.9 | 10.8 | 10.1 | 9.5 | 4.7 | 4.6 | 8.3 | 7.2 | 5.4 | 7.9 |
Construction | 20.1 | 27.7 | 29.5 | 31.7 | 32.1 | 28.9 | 28.6 | 19.9 | 18.1 | 21.5 | 21.8 | 24.3 | 22.9 |
Source: ifo Business Survey.
© ifo Institute