Results of the October 2012 Ifo Business Survey: Ifo Business Climate Continues to Deteriorate
The Ifo Business Climate Index for German industry and trade fell in October for the sixth time in succession. Companies again expressed growing dissatisfaction with their current business situation. The business outlook nevertheless remained unchanged at last month’s low level. The clouds over the German economy are darkening.
In manufacturing last month’s deterioration in the business climate continued in October. Assessments of the current business situation were significantly poorer and now approximately correspond to the long-term average value. Business expectations recovered slightly for the first time in six months and are less pessimistic. According to manufacturers’ reports capacity utilization rates were considerably lower than in the previous quarter. This marks the third drop in succession.
After staging a recovery last month, the business climate index in both retailing and wholesaling dropped this month. The retailers surveyed were much more satisfied with their current business situation, but expressed far greater pessimism about their six-month business outlook. Wholesalers reported slightly improved expectations, but their assessments of the current business situation cooled down significantly.
In construction the business climate indicator fell further. Although the construction companies surveyed expressed less pessimism about their six-month business outlook, they were far less satisfied with their current business situation.
Hans-Werner Sinn
President of the Ifo Institute
Ifo Business Climate Germany (Index)
Business Situation and Expectations by Sector (Balances)
Ifo Business-Cycle Clock
Time series
| Ifo Business Climate Germany (Index, 2005 = 100, seasonally adjusted) |
|
|
10/11 |
11/11 |
12/11 |
01/12 |
02/12 |
03/12 |
04/12 |
05/12 |
06/12 |
07/12 |
08/12 |
09/12 |
10/12 |
| Climate |
106.7 |
106.8 |
107.3 |
108.3 |
109.6 |
109.7 |
109.7 |
106.7 |
105.1 |
103.2 |
102.3 |
101.4 |
100.0 |
| Situation |
117.0 |
116.7 |
116.7 |
116.3 |
117.4 |
117.3 |
117.4 |
113.1 |
113.8 |
111.5 |
111.1 |
110.3 |
107.3 |
| Expectations |
97.3 |
97.7 |
98.7 |
100.9 |
102.3 |
102.6 |
102.6 |
100.7 |
97.1 |
95.5 |
94.1 |
93.2 |
93.2 |
|
| Source: Ifo Business Survey |
|
| Ifo Business Climate Germany (Balances, seasonally adjusted) |
|
|
10/11 |
11/11 |
12/11 |
01/12 |
02/12 |
03/12 |
04/12 |
05/12 |
06/12 |
07/12 |
08/12 |
09/12 |
10/12 |
| Trade and Industry |
6.0 |
6.2 |
7.3 |
9.2 |
11.7 |
11.9 |
11.9 |
6.1 |
3.0 |
-0.8 |
-2.5 |
-4.3 |
-7.0 |
| Manufacturing |
10.2 |
9.2 |
9.2 |
13.5 |
14.3 |
13.9 |
15.2 |
10.3 |
4.7 |
-2.0 |
-1.3 |
-4.3 |
-7.2 |
| Construction |
-12.9 |
-8.6 |
-6.2 |
-3.6 |
3.4 |
2.1 |
-4.0 |
-5.3 |
-4.7 |
-6.7 |
-7.0 |
-10.1 |
-11.9 |
| Wholesaling |
7.0 |
10.2 |
11.3 |
10.6 |
14.9 |
12.7 |
12.5 |
7.8 |
4.8 |
3.8 |
-2.2 |
0.0 |
-3.3 |
| Retailing |
2.6 |
1.6 |
5.7 |
-0.4 |
3.7 |
10.5 |
10.5 |
-3.8 |
0.2 |
5.0 |
-4.7 |
-4.1 |
-5.9 |
|
| 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.
