– Moods among companies in Germany have improved a bit. The IFO business climate indicator increased in July to 88.6 points, from 88.4 points in June – informs Clemens Fuest, president of the IFO Institute. – Economic recovery in Germany remains poor – he adds.
The data had to disappoint economists because they were counting on a significant increase in the indicator to 89 points. This is also the best reading since May 2024. A year ago in July the indicator was 87 points, so the improvement is visible, but looking at the balance of readings, it is still negative and amounted to -6.4 points. (seasonally corrected data) at -6.8 points in June and -9.8 points 12 months earlier.
The indicator is based on a study of 9,000 enterprises in which companies are asked to present business expectations for the next six months. Level 100 points This reading comparable to this from 2015 higher than 100 points. The index had the quotations recently in July 2021.
Improvement in industry
– The index increased in the production sector. Companies evaluated their current situation as noticeably better. Their expectations still improved. But An increase in orders still does not show dynamics. The use of production capacity increased only slightly, from 77.0 to 77.2 percent. – describes the president.
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The balance of readings for industry, however, is still clearly negative and amounted to -11.8 points. Compared to -13.9 points a month earlier and -14.1 points a year earlier.
Services, the only growth of growth
Worse information comes from the service sector, which has the greatest importance in German GDP.
– Current economic results were rated less positively. Expectations were also slightly revised down. IT service providers have noted deterioration. In turn, the transport and logistics sector developed positively. In this sector, the business climate has clearly improved, says Clemens Fuest.
Services, however, are the only sector where the upward trends can be seen. The read balance was positive in July and amounted to 2.7 points. Compared to 3.8 points a month earlier and 0.7 points a year earlier.
The business climate in retail has worsened because of more than a month of pessimistic expectations. The read balance was the worst of the four monitored sectors of the German economy and amounted to -20.2 points. A month earlier it was -19.2 points, and a year earlier -27.8 points
In the construction sector, the index increased again. Both the current situation and expectations have improved. – nevertheless Lack of orders remains a serious problem – says the president of IFO. The balance of readings for construction indicates regression, because it was -14 points. at -15.1 a month ago and -27.1 years ago.
A picture of the wobble economy comes out of the summary. Its results are mainly influenced by problems with the export of cars to China, which results from the development of the electric car industry there, but also duties in the USA. EU negotiators hope to defect the current customs burden of cars from 27.6 percent. up to 15 percent
