GERMANY: Ifo Business Climate Index continues to rise

The Ifo Institut announced its Business Climate Index for industry and trade in Germany which it said rose to 105.5 points in December from 104.7 last month. Positive assessments of the current business situation remained unchanged and the outlook for the months ahead continued to brighten. Dropping oil prices and a falling euro exchange rate are seasonal gifts to the German economy.

In manufacturing, the business climate continued to improve. Firms only slightly scaled back their assessments of the current business situation. After three months of negative figures, the business outlook for the next half year turned positive again in December. Exports continue to support German manufacturing.
In wholesaling, the business climate indicator rose for the third month in succession. This was particularly due to far more optimistic expectations, while wholesalers assessed the current business situation as less favourable. In retailing, by contrast, the business climate clouded over. While retailers were more satisfied with the current business situation, they expressed greater pessimism about the months ahead.
In construction, the business climate deteriorated marginally, but nevertheless remains at a very high level. Contractors slightly scaled back their favourable assessments of both the current business situation and the business outlook.
The Ifo Indicator for the services sector rose in December to 25.6 balance points, from 19.4 points in the previous month. Very favourable assessments of the current business situation continued to improve.
Service providers are also far more optimistic about future business developments than in previous months, with expectations rising to their highest level since July 2011. Service providers, especially in the hotel and restaurant industry, still plan to further increase prices.