ifo Business Climate Index Falls (November 2020)
Sentiment among German managers has deteriorated. The ifo Business Climate Index fell from 92.5 points (seasonally adjusted) in October to 90.7 points in November. The drop was due above all to companies’ considerably more pessimistic expectations. Their assessments of the current situation were also a little worse. Business uncertainty has risen. The second wave of coronavirus has interrupted Germany’s economic recovery.
This month’s bright spot is manufacturing. The business climate improved here, with companies assessing their current situation as markedly better. Incoming orders rose, albeit more slowly than last month. However, expectations for the coming months turned notably less optimistic.
In the service sector, the Business Climate Index dropped noticeably. For the first time since June, it is back in negative territory. Assessments of the current situation are much less positive than they were. Moreover, substantially more companies are pessimistic about the coming months. The indicators for hotels and hospitality absolutely nosedived.
In trade, the business climate worsened. Companies were less content with their current situation. Their expectations are thoroughly clouded over, too. Retailers in particular reported that business is running a lot less smoothly.
In construction, the index fell somewhat. Construction companies’ assessments of their current business situation were slightly better than in the previous month. However, their expectations were more pessimistic.
Clemens Fuest
President of the ifo Institute
