Another weak read this month for this survey. The Ifo index is Germany’s most prominent leading indicator
- at 85.7 it dropped for the fifth month in a row due to the August number revised upwards to 85.8
- 85.7 is one of the weakest Ifo index readings of the last five years
- The current assessment component continued its recent downward trend
- Expectations improved a little
The negatives hitting the German economy are continuing:
- the Chinese economy is not gaining momentum
- The Chinese economy is increasingly rivalling the German economy
- ECB rate hikes continue (although the end is in sight, if not already here) and the delayed (transmission) impacts will continue to rise
- energy transition and energy prices uncertainty persist
While the current assessment component continued its recent downward trend, expectations improved somewhat. What today's reading shows is that the economic picture has not changed. The Chinese economy is still not gaining momentum and, at the same time, has become a rival to the German economy. The European Central Bank continues hiking interest rates and the delayed impact of tighter monetary policy will continue to weigh on the economy. Policy uncertainty regarding the energy transition and energy prices has also not disappeared. The recently announced policy measures have, so far, done very little to turn sentiment around. In fact, German businesses, as well as politicians and the entire economy, are gradually getting used to the idea that the economy is in for a longer period of subdued growth. In this regard, today’s Ifo index is unfortunately only a confirmation and shows we are nowhere near a turning point.
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I posted up info on this indicator a little earlier ICYMI:
- the index is designed to assess the current economic climate in Germany and forecast future economic developments by surveying around 9,000 businesses in various sectors such as manufacturing, construction, wholesale, and retail.
Much more at that link.