The Ifo institute at the University of Munich said its business climate index, based on a survey of 7,000 executives, rose to 91.9 from 91.3 in September. That’s the highest reading since September last year. The institute said the economic recovery continues hesitantly.

The surveyed firms are slightly less dissatisfied with their current business situation than in September. They have again given more favourable appraisals of the business outlook for the coming six months. The economic recovery continues hesitantly.

In manufacturing, the business climate is not quite as poor as it was in the previous month. The continuingly unfavourable business situation for manufacturers has improved slightly. With regard to the six-month business outlook, the survey participants are more confident than in September. Despite the appreciation of the euro, the firms see improved export opportunities. They are utilising their production capacities at a slightly higher pace than in the summer, although the utilisation rate is still far below average. The firms are planning to slow down the pace of staff reductions somewhat.

In wholesaling the business climate index has risen further. The survey participants report a clearly improved business situation in comparison to the previous month. Their appraisal of the business outlook is somewhat more critical, however. Retailers are more dissatisfied with their current business situation. They are also more sceptical regarding the six-month business outlook than in September. As a result, the business climate in retailing has worsened.

In construction the business climate remains largely unchanged. The firms are slightly more dissatisfied with their current business situation but have given more favourable assessments of their business outlook than in the previous month.

Business Climate in the Services Cloudier

The Ifo Business Climate Indicator in the German service sector has fallen in October. This is the first worsening of the business climate in the services in six months. The expectations of the firms were solely responsible for the decline. They have given less positive appraisals of the six-month business outlook than in September. In contrast, they have given more favourable assessments of their current business situation than in the previous month. The personnel plans of the service providers, however, were just as cautious as in September.