ifo Business Climate Index continues record run

While Germany's politicians struggle to reach agreement on a working coalition government, the country's economy continues to purr along smoothly. Sentiment among German businesses is very strong, according to the most recent figures presented this morning by Clemens Fuest, president of the ifo Institute.

The ifo Business Climate Index rose to a new record high of 117.5 points in November from 116.8 points in October. This was due to far more optimistic business expectations, says Fuest. Companies’ assessments of the current business situation were no longer as positive as last month. The German economy is on track for a boom, he adds. The latest figures indicate economic growth of 0.7% in the fourth quarter, pointing to growth of 2.3% for 2017 as a whole.

In manufacturing the index also hit a new record high thanks to far more optimistic expectations. Manufacturers slightly scaled back assessments of their current business situation, which nevertheless remain at a high level. A growing number of manufacturers plan to increase prices.

In wholesaling the business climate index rose markedly and is now just slightly below its historical record high. Wholesalers were considerably more satisfied with their current business situation. They also expect business to pick up further over the next six months. In retailing, by contrast, the business climate deteriorated. Retailers’ assessments of their current business situation were far poorer, but they expressed greater optimism about the next six months.

In construction the business climate index fell. Contractors slightly scaled back assessments of both their current business situation and their expectations, which nevertheless remain at a high level.