ifo Business Climate Index Rises (December 2020)
Sentiment among German managers has improved. The ifo Business Climate Index rose to 92.1 points in December from 90.9 points (seasonally adjusted) in November. Companies were more satisfied with their current business situation. They were also less skeptical about the coming six months. While the lockdown is hitting certain sectors hard, overall the German economy is showing resilience.
In manufacturing, the index rose markedly. Assessments of the current situation climbed to their highest level since January. Optimism regarding the coming six months also increased noticeably. This development was due in particular to the chemical industry and mechanical engineering.
In the service sector, the business climate indicator recovered somewhat. Companies were more satisfied with their current situation. Their expectations were also a little less pessimistic. This development was largely thanks to transport and logistics companies and to real estate activities. However, the crisis is still hurting tour operators, accommodation services, and creative artists.
In trade, the business climate improved. Companies’ assessments of their current situation were decidedly more positive. Their expectations also brightened somewhat. The rise of these indicators was driven primarily by wholesalers serving the manufacturing sector. In retail, the current situation improved, but expectations clouded over. A large majority of answers were received prior to the latest tightening of the lockdown.
In construction, the Business Climate Index remained unchanged. While assessments of the current situation were more positive, pessimism grew with regard to the coming half year.
Clemens Fuest
President of the ifo Institute
