ifo: Business Climate Index Unchanged in January

Sentiment among companies in Germany has remained unchanged. The ifo Business Climate Index held steady at 87.6 points in January. Assessments of the current situation edged up somewhat, while expectations were revised slightly downward. The German economy is starting the new year with little momentum.

In manufacturing, the index increased sharply. Companies assessed current business conditions as more positive. Their expectations were also notably less pessimistic. However, capacity utilization fell from 78.1 to 77.5 percent, remaining below the long-term average of 83.2 percent.

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In the service sector, the business climate deteriorated. The current situation was assessed as slightly worse. Expectations also turned somewhat more pessimistic. In logistics, order backlog and sentiment weakened. The business climate also cooled noticeably in tourism.

In trade, the index rose sharply. Companies rated their business situation as more favorable, and expectations also became less pessimistic. This improvement was seen in both retail and wholesale trade. However, both indicators remain well below their long-term averages.

In construction, the business climate improved. This was driven by a better assessment of current business conditions. However, the expectations indicator was unchanged. The order situation remains weak, particularly in building construction.

More information: www.ifo.de

ifo Institut für Wirtschaftsforschung e.V., München