Results of the October 2015 Ifo Business Survey
Ifo Business Climate Index Declines Only Slightly
The Ifo Business Climate Index for German industry and trade fell to 108.2 points in October, from 108.5 points in September. Companies were slightly less satisfied with their current business situation than in September. Optimism with a view to future business developments nevertheless continued to grow. The German economy is proving remarkably resilient in view of this autumn’s multiple challenges.
Indeed the Volkswagen scandal has had no impact on the German automotive industry. The climate index for the automotive sector even continued to rise this month. Assessments of the current business situation and business expectations both improved. Firms plan to ramp up production. Exports, however, are not expected to provide further stimuli.
In manufacturing on the whole, however, the business climate index fell for the third month in succession. Manufacturers scaled back their very good assessments of the current business situation. They nevertheless expect business to pick up in the near future. Capacity utilisation rose marginally to 84.4%.
In wholesaling the business climate remained unchanged. While wholesalers slightly scaled back their very good assessments of the current business situation, they expressed greater optimism about the months ahead. In retailing the business climate index fell. This was mainly due to markedly less favourable assessments of the current business situation. Also, business expectations deteriorated slightly.
In construction, the business climate improved for the third month in succession. While contractors assessed their current business situation somewhat less favourably, they were more optimistic about the months ahead.
President of the Ifo Institute
Results of the Ifo Business Survey in Germany in all details (in German)
Ifo Business Climate Germany (Index)
Business Situation and Expectations by Sector (Balances)
Ifo Business-Cycle Clock Manufacturing Industry
Ifo Business-Cycle Clock Industry and Trade
The Ifo Business Climate Index is based on ca. 7,000 monthly survey responses from firms in manufacturing, construction, wholesaling and retailing. The firms are asked to give their assessments of the current business situation and their expectations for the next six months. They can characterise their situation as “good”, “satisfactory” or “poor” and their business expectations for the next six months as “more favourable”, “unchanged” or “more unfavourable”. The balance value of the current business situation is the difference between the percentages of the responses “good” and “poor”, the balance value of the expectations is the difference between the percentages of the responses “more favourable” and “more unfavourable”. The business climate is a transformed mean of the balances of the business situation and the expectations. For the purpose of calculating the index values, the transformed balances are all normalized to the average of the year 2005.