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Last Updated:
Nov 24, 2009 - 2:51:07 PM |
The German Ifo Business Climate indicator for industry and trade, improved again in November to a 15-month high. The index increased to 93.9 from 92 in October, the highest reading since August last year. It had dipped to a 26-year low of 82.2 in March 2009.
The firms in the survey, which is produced by the Ifo Institute for Economic Research at the University of Munich, are again not quite so dissatisfied with their current business situation. Also their view of the business outlook in the coming six months is more favourable than in October. The positive and negative business expectations now balance out. The German economy continues on the road to recovery.
Ifo says that in manufacturing the business climate has clearly brightened. The current business situation for manufacturers is noticeably less unfavourable than in October. Their assessments of the six-month business outlook are once again positive. They have also given more positive appraisals of their export opportunities. Their personnel plans are less strongly geared to staff reductions than before.
In wholesaling and retailing the business climate index has likewise improved. In both distribution sectors the survey participants are less critical with regard to developments in the coming six months. Retailers have also appraised their current business situation somewhat more favourably. In wholesaling the business situation remains largely unchanged in November.
In construction the business climate index has fallen. Although the firms have assessed their current business situation similarly as in October, they have expressed much more reserve regarding their business outlook.
The Ifo Business Climate Index is based on ca. 7,000 monthly survey responses of firms in manufacturing, construction, wholesaling and retailing. The firms are asked to give their assessments of the current business situation and their expectations for the next six months. They can characterise their situation as “good”, “satisfactorily” or “poor” and their business expectations for the next six months as “more favourable”, “unchanged” or “more unfavourable”. The balance value of the current business situation is the difference of the percentages of the responses “good” and “poor”; the balance value of the expectations is the difference of the percentages of the responses “more favourable” and “more unfavourable”. The business climate is a transformed mean of the balances of the business situation and the expectations.
For calculating the index values the transformed balances are all normalised to the average of the year 2000.
Ifo Business Climate Indicator in the Services Falls
The Ifo Business Climate in the German service sector has worsened slightly in November. According to the survey responses, the current business situation is more unfavourable than in October. However, with regard to the six-month business outlook, the firms are more confident, their business expectations having worsened in the previous month. When it comes to hiring new staff, the service providers intend to exercise more caution than previously.
