ifo Business Climate Index Falls
Disquiet is growing among German businesses. The ifo Business Climate Index fell from 101.0 points in December to 99.1 points in January, dropping to its lowest level since February 2016. Companies assessed their current business situation slightly less favourably. Their business expectations also deteriorated sharply and turned pessimistic for the first time since December 2012. The German economy is experiencing a downturn.
In manufacturing the business climate index fell markedly once again this month. This was primarily due to far more pessimistic business expectations. Manufacturers also assessed their current business situation slightly less favourably. The business climate deteriorated in all of the key business sectors apart from the chemicals industry. Capacity utilisation fell by 0.7 percent to 86.3 percent, but remains above its long-term average of 83.7 percent.
In the service sector, the business climate index declined due to less optimistic business expectations, but remained at a high level. However, service providers assessed their current business situation more favourably.
The index also dropped markedly in the trade sector. The business outlook clouded over, but traders were slightly more satisfied with their current business situation.
In construction there was a clear setback for the first time in years and the business climate deteriorated significantly. Both climate components fell markedly. Assessments of the current business situation nevertheless remain at a very high level.
