ifo Business Climate Index Falls (July 2019)
The mood in German C suites is growing uneasy. The ifo Business Climate Index fell in July from 97.5 (Revised value due to seasonal adjustment) to 95.7 points. Companies were less satisfied with their current business situation and are also looking ahead with increased skepticism. The German economy is navigating troubled waters.
In manufacturing, the business climate indicator is in freefall. The situation index took a serious tumble; such a major decline was last seen in February 2009. No improvement is expected in the short term, as businesses are looking ahead to the next six months with more pessimism. Capacity utilization fell from 85.3 to 83.9 percent and is now just slightly above the long-term average.
In services, the business climate has clouded over. Service providers were somewhat less satisfied with their current situation. Their expectations are slightly pessimistic for the first time since July 2009.
In trade, the index has slid sharply. Companies are assessing their current situation as considerably less positive, and their outlook for the coming months is markedly more skeptical. The decline in the business climate indicator was more pronounced in wholesale than in retail.
Construction proved to be the positive exception this month, with an increase in the business climate index. Although companies assess their current situation as somewhat less positive, they are still looking to the coming months with optimism.
Prof. Dr. Dr. h.c. Clemens Fuest
President
