German ifo Index declines less than expected

Following market volatility and a sharp decline of the ZEW index in the aftermath of the Brexit referendum, the ifo index offered a moderately positive surprise to investors by declining only marginally.

In contrast to the ZEW index, which is based on a direct poll among more than 220 analysts and institutional investors, the ifo business climate index is based on monthly reports among 7000 businesses in Germany.

According to ifo data, the assessment of the current economic climate in Germany declined from 108.7 to 108.3 basis points month on month, while the six month outlook dropped from 103.1 to 102.2 basis points.

Considering the economic climate by sector, for the month of July, wholesale businesses reported the sharpest decline, from 15.1 to 11.8, followed by manufacturing which dropped from 10.9 to 9.8 and the industrial sector, which fell from 10.4 to 9.6 basis points. The retail and construction sector on the other hand showed improvements, increasing by 8 to 10.2 and 4.8 to 5.4 basis points respectively.

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