Good signs for German business as IFO index up

The German business climate index published by the Institute for Economic Research (Ifo) rose from 98.7 to 99.6 points in March, the first increase after six consecutive declines, the Ifo institute revealed on Monday.

“The German economy is resisting the current economic downturn”, said Ifo President Clemens Fuest.

According to Ifo, the index showed that German companies were slightly more satisfied with their current business situation than in previous months and were noticeably more optimistic about the coming six months.

In the services sector, the German business climate index rose “considerably” from 21.3 to 26 points in March, which the German economic institute said was due to “noticeably more optimistic expectations”.

“The service providers assessed their already very good business situation even better,” said Fuest.

The business climate in the retail sector also improved. Assessments of the current situation rose to the highest level since May 2018 while expectations also brightened. The retail sector in particular was “pleased with very good business development”.

After a recent downward trend, the business climate index for the German construction industry, rose again “due to a significantly improved business situation”, while expectations remained virtually unchanged.

Only the German manufacturing sector experienced less favorable index scores. The business climate in this sector weakened in March, dropping to 6.6 points from 9.1 points. The expectation index for the sector also fell to its lowest level since November 2012.

“In view of declining demand, companies are hardly planning to increase production,” said Fuest.

Today’s Ifo index came as a change to a series of negative economic news from Germany. At the end of January, the German government lowered its official GDP growth forecast to 1.0 percent for 2019 and last week, Ifo also revised its forecast for growth down from 1.1. percent to 0.6 percent.