ifo Business Climate Index Rises (February 2021)
Sentiment among managers in Germany has improved noticeably. The ifo Business Climate Index rose from 90.3 points (seasonally adjusted) in January to 92.4 points in February. Assessments of the current business situation were more positive. Moreover, pessimism regarding the coming months was markedly reduced. The German economy is proving robust despite the lockdown, especially thanks to strength in industry.
In manufacturing, the index jumped to its highest value since November 2018. Assessments of the current situation improved. Companies were also notably more optimistic about the coming months. The Business Climate Index rose across all major branches of industry.
In the service sector, the Business Climate Index rose. Service providers were more satisfied with their current situation. What’s more, their business expectations were less pessimistic. The situation remains difficult in hospitality. For the first time, the tourism industry is showing cautious optimism regarding the coming vacation season.
In trade, the Business Climate Index rose a little following last month’s slump. Expectations are still pessimistic, but not to the same degree as last month. In contrast, companies’ assessments of their current situation were worse. Sales plummeted as a result of the lockdown.
The business climate improved in construction, too. This was due to less pessimistic expectations. However, construction companies assessed their current situation as somewhat worse, above all because of unusually cold weather.
Clemens Fuest
President of the ifo Institute
