ifo Business Climate Index Falls Considerably (July 2022)
Sentiment in German business has cooled significantly. The ifo Business Climate Index fell to 88.6 points in July, down from 92.2 points (seasonally adjusted) in June, to reach its lowest value since June 2020. Companies are expecting business to become much more difficult in the coming months. They were also less satisfied with their current situation. Higher energy prices and the threat of a gas shortage are weighing on the economy. Germany is on the cusp of a recession.
In manufacturing, the index plummeted. Pessimism regarding the coming months reached its highest level since April 2020. This pessimism extends across almost all industries. Companies also assessed their current situation as worse. For the first time in two years, new orders fell slightly.
In the service sector, the business climate worsened substantially. The collapse was particularly pronounced in companies’ expectations. The mood turned even in tourism and hospitality, despite great recent optimism here. Service providers assessed their current business as worse, but the indicator remains at a high level.
In trade, the indicator once again took a nosedive. Businesses were less satisfied with their current situation. They are also increasingly concerned about the coming months. At the present time, not a single retail segment is optimistic about the future.
Following a brief recovery in the previous month, the business climate in construction again deteriorated notably. Assessments of the current situation fell to their lowest level since April 2016. Expectations, too, are marked by deep pessimism.
Clemens Fuest
President of the ifo Institute
Survey
ifo Business Climate Index Falls Considerably (July 2022)
Sentiment in German business has cooled significantly. The ifo Business Climate Index fell to 88.6 points in July, down from 92.2 points (seasonally adjusted) in June, to reach its lowest value since June 2020. Companies are expecting business to become much more difficult in the coming months. They were also less satisfied with their current situation. Higher energy prices and the threat of a gas shortage are weighing on the economy. Germany is on the cusp of a recession.
