Preview of the German Ifo Business Climate Index due on 24 November 2014; it rates the current business climate and measures expectations for the next six months.
- We get the data at 0900GMT
- The German Ifo Business Climate Index is a composite index based on a survey of manufacturers, builders, wholesalers and retailers
- The index is compiled by the Ifo Institute for Economic Research
- It surveys around 7,000 German firms
The firms are queried as to their current business situation, with the following choices
- good
- satisfactory
- poor
And also for their six-month business outlook, with these three choices
- more favorable
- unchanged
- less favorable
The balance value of the current business situation is the difference in percentage shares of the responses “good” and “poor”
The balance value of the expectations is the difference in percentage shares of the responses “more favorable” and “less favorable”
The business climate is a geometric mean of the balances of the business situation and the business expectations, normed to the average of the year 2000.
Recent results have been moving downwards. The most recent survey found:
- Assessments of the current business situation were once again less favourable
- Expectations with regard to the six-month business outlook continued decline
- The outlook for the German economy deteriorated once again
Ifo business surveys showing a clear downturn
What is expected this time around? (spoiler alert … worse again)
- Ifo Business Climate: expected is 103.0, prior was 103.2
- Ifo Current assessment: expected is 108.0, prior was 108.4
- Ifo expectations: expected is 98.5, prior was 98.3
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The picture in Germany is mixed most recently, with a poor PMI but an improved ZEW survey:
- The November flash manufacturing PMI came in 50.0 (vs. 51.5 expected and 51.4 prior)
- November German ZEW economic sentiment came in at a huge 11.5 (vs. 0.5 expected and prior of -3.6)
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A weak reading on today’s IFO is the expected result, and given the big sell-off in euro on Friday it would appear the danger sdie for the market may well be if the survey results surprise to the topside. This is something to be wary of if you are short euro,. though I am going to stick with the masses and favour further euro losses today.
