ifo Business Climate Recovers (January 2022)
Sentiment among German companies has brightened at the beginning of the year. The ifo Business Climate Index rose to 95.7 points in January, up from 94.8 points (seasonally adjusted) in December. While companies’ assessments of the current situation were somewhat less positive, their expectations improved considerably. The German economy is starting the new year with a glimmer of hope.
In manufacturing, the index jumped significantly higher. Companies were more satisfied with their current business. They were also more optimistic about the coming months. The situation regarding supply bottlenecks in intermediate products and raw materials eased a little. Capacity utilization rose from 84.9 percent to 85.6 percent.
In the service sector, the Business Climate Index rose again after falling for three consecutive months. Pessimism disappeared from companies’ expectations. The tourism industry is looking forward to a promising summer. However, service providers were less satisfied with their current situation. Hospitality remains stuck in crisis.
The business climate improved in trade, too. While companies’ assessments of their current situation were slightly worse, their expectations brightened noticeably. Especially in retail, pessimism about the future was markedly reduced.
In construction, the index rose. Companies were somewhat more satisfied with their current business. The expectations indicator also rose. Material shortages eased further.
Clemens Fuest
President ot the ifo Institute
