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Results of the March 2016 Ifo Business Survey

Ifo Business Climate Index Rises

After weakening for three consecutive months, sentiment among German businesses brightened slightly in March. The Ifo Business Climate Index for German industry and trade rose to 106.7 points in March from 105.7 points in February. Assessments of the current business situation improved, reaching their highest level in six months. After last month’s sharp decline, expectations also recovered somewhat. German businesses are less sceptical than in February.

In manufacturing the business climate improved slightly, after last month’s sharp decline. Manufacturers were once again more satisfied with their current business situation. After February’s downturn, business expectations recovered slightly. The improvement in manufacturing was mainly due to consumer goods producers.

In wholesaling the business climate index rose. Assessments of the current business situation – already good in February – improved markedly this month. On the other hand, wholesalers’ business expectations remained optimistic, but to a slightly lesser degree than last month. The business climate in retailing showed a clear improvement. Retailers were far more satisfied with their current business situation than in February. Their business expectations also brightened.

Construction was the only sector in which the business climate index declined somewhat. Assessments of the current business situation edged downwards from February’s record high. Contractors, however, were slightly more optimistic about the months ahead.

Hans-Werner Sinn
President of the Ifo Institute

Results of the Ifo Business Survey in Germany in all details (in German)

  1. "ifo Konjunkturperspektiven 03/2016", ifo Institut, München, 2016 | Details | PDF Download

Ifo Business Climate Germany (Index)

Image Ifo Business Climate Germany (Index)

Business Situation and Expectations by Sector (Balances)

Image Business Situation and Expectations by Sector (Balances)

Ifo Business-Cycle Clock Manufacturing Industry

Image Ifo Business-Cycle Clock Manufacturing Industry

Ifo Business-Cycle Clock Industry and Trade

Image Ifo Business-Cycle Clock Industry and Trade

Ifo Business Cycle Traffic Lights Industry and Trade

Image Ifo Business Cycle Traffic Lights Industry and Trade

Time series


Ifo Business Climate Germany (Index, 2005 = 100, seasonally adjusted)
 03/1504/1505/1506/1507/1508/1509/1510/1511/1512/1501/1602/1603/16
Climate 107.8 108.7 108.6 107.6 108.1 108.4 108.6 108.2 109.1 108.6 107.3 105.7 106.7
Situation 112.0 114.3 114.6 113.5 114.1 115.0 114.1 112.8 113.5 112.9 112.5 112.9 113.8
Expectations 103.6 103.3 102.9 102.1 102.5 102.3 103.3 103.9 104.8 104.6 102.4 98.9 100.0
Source: Ifo Business Survey

Ifo Business Climate Germany by Sector (Balances, seasonally adjusted)
 03/1504/1505/1506/1507/1508/1509/1510/1511/1512/1501/1602/1603/16
Trade and Industry 8.6 10.3 10.2 8.4 9.3 9.9 10.1 9.5 11.1 10.3 7.7 4.5 6.5
Manufacturing 12.1 14.2 13.7 11.2 11.7 11.2 10.2 9.8 12.4 12.3 8.1 3.5 5.3
Construction -7.7 -5.1 -4.6 -3.4 -4.1 -2.5 0.4 0.6 2.2 0.9 -0.4 0.3 -0.7
Wholesaling 10.1 12.9 10.1 7.9 14.4 13.4 13.9 13.9 15.2 11.9 13.1 12.3 13.4
Retailing 5.0 3.0 7.2 6.0 4.4 10.9 14.7 11.0 8.3 7.4 7.2 4.4 10.8
Source: Ifo Business Survey

Explanatory note

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. 
Monthly movements of the Ifo Business Climate Index for Industry and Trade can be transformed with the help of Markov Switching Models into probability statements for the two cyclical regimes expansion or contraction. The Ifo Business Cycle Traffic Lights provides the monthly regime probabilities for the expansion phase. The probabilities signal an economic expansion (green lights) insofar as they exceed the 66% mark; contractions insofar as they are under the 33% mark (red lights); or indifference (yellow lights) when in the range in between. This indifference interval can be interpreted as a buffer zone between the regimes expansion and contraction, in which particularly great uncertainty exists about the state of the economy.

Contact

Dr. Klaus Wohlrabe

Ifo Institute
Ifo Center for Business Cycle Analysis and Surveys
Phone: +49(0)89/9224-1229
Fax: +49(0)89/9224-1463
Email: wohlrabe @ ifo.de
Website


Short URL: www.ifo.de/w/4GH7fwFNm