ifo Business Climate Index Stabilizes (April 2022)
Sentiment in the German economy has stabilized at a low level. The ifo Business Climate Index rose to 91.8 points in April, after 90.8 points in March. This was due primarily to less pessimism in companies’ expectations. Their assessments of the current situation are minimally better. After the initial shock of the Russian attack, the German economy has shown its resilience.
In manufacturing, the index climbed again after the plunge it took in the previous month. The reason for this was the rise in the expectations indicator. Companies are somewhat less pessimistic about the coming months. In contrast, they were rather less satisfied with their current situations. In the chemical industry, however, expectations as well as current assessments worsened.
The business climate in the service sector improved markedly. Service providers were significantly more satisfied with their current business. In addition, they look to the coming months with less pessimism. Transportation and logistics in particular were able to regain ground after the previous month’s collapse. In the hospitality industry, improvements in the coronavirus situation resulted in a much better business climate.
In trade, the Business Climate Index fell further due to noticeably worse assessments of the current situation. Expectations improved slightly, but are still strongly pessimistic.
In construction, the business climate plunged to its lowest value since May 2010. Companies were much less satisfied with their current situation, and their expectations have not been so pessimistic since reunification. Business in this sector is burdened especially by bottlenecks in the materials supply.
Clemens Fuest
President of th ifo Institute
