ifo Business Climate Index Falls (January 2020)
At the start of the year, sentiment among German managers is somewhat diminished. The ifo Business Climate Index fell from 96.3 points in December to 95.9 points in January. This was due to companies’ more pessimistic outlook for the coming months. In contrast, the indicator of the current situation rose slightly. The German economy is starting the year in a cautious mood.
Manufacturing is showing signs of recovery. The business climate has improved markedly. There was a particularly notable increase in the index of the current situation, which has not risen so strongly since February 2017. Moreover, companies were once again less pessimistic regarding the coming months. Capacity utilization rose from 82.6 percent to 83.1 percent.
In the service sector, the indicator fell noticeably. This was due to companies’ considerably more restrained expectations. However, they were somewhat more satisfied with their current situation.
In trade, the business climate improved. The indicators of the current situation and of expectations were both higher than in the previous month. However, this was due solely to wholesalers; retailers were more reserved.
In construction, the index fell back. Companies’ assessments of the current situation dropped to their lowest level since June 2018. In addition, they were even more skeptical about the coming months.
Prof. Dr. Dr. h.c. Clemens Fuest
Präsident
