ifo business confidence Germany cautiously optimistic

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The monthly ifo business index reflecting economic expectations for Germany declined again in June, it is the third month in a row that respondents express pessimism on the outlook for the German economy.

The index, which is based on monthly reports from 7000 business in Germany, indicates business sentiment on the current situation, business sentiment as well as the six month economic outlook. All three indicators deteriorated gradually in June.

The assessment of the current climate declined from 108.5 bsp in May to107.4bsp in June, the view on the current situation dropped from 114.3 to 113.1 compared to the previous month and the outlook declined from 103bsp to 102 bsp. Nevertheless, these indicators are still above the levels of confidence reported at the end of 2014.

The cautious sentiment is especially tangible in the manufacturing industry, where the ifo institute reported pessimism on the economic outlook. Similarly, respondents in the wholesale and retail industry expressed growing concerns about the economic outlook ahead. In contrast, the troubled construction industry, which expressed pessimism for most of the last year, now showed some improvement with the index moving from -4.8 to -3.8 mom. Similarly, the outlook for the services industry improved from 26.1 to 27.1 bsp.

Ifo president Hans-Werner Sinn (pictured) describes the mood among German businesses as “cautiously optimistic.”

“The overall very positive assements of the current situation have declined gradually. Looking ahead for the next few months, the service sector is anticipating a clear improvement. Business plans are still set to expand, although perhaps less so than expected in May” comments Sinn.

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