ifo Business Climate Rises Slightly (July 2025)

Sentiment among German companies has improved somewhat. The ifo Business Climate Index rose to 88.6 points in July, up from 88.4 points in June. Companies were slightly more satisfied with current business. Their expectations, however, remained largely unchanged. The upturn in the German economy remains sluggish.

In manufacturing, the index went up. Companies assessed their current situation as noticeably better. Their expectations also brightened further. However, incoming orders still lack momentum. Capacity utilization rose only slightly from 77.0 to 77.2 percent.

In the service sector, the business climate deteriorated. Current business activity was assessed less favorably, while expectations were also revised slightly downward. IT service providers suffered a setback. By contrast, the transport and logistics sector showed a positive development. Here, the business climate improved noticeably.

In trade, the index weakened somewhat due to more pessimistic expectations. Although the current situation improved slightly, it remained unsatisfactory.

In construction, the index rose again. Both assessments of the current situation and expectations improved. Nevertheless, a lack of orders remains a major problem.
 

Clemens Fuest
President of the ifo Institute