IFO index increases slightly: German economy is more optimistic

Confidence is increasing in the German executive floors.

IFO index increases slightly: German economy is more optimistic

Confidence is increasing in the German executive floors. There is still a great deal of uncertainty in some areas. But the recession is likely to be less deep than expected, according to the IFO.

The mood in the management floors of the German economy rose more clearly than expected in November, which was solely due to the better business expectations. The IFO business climate index rose to 86.3 (October revised: 84.5) points, as reported by the Munich IFO Institute after its monthly survey of around 9,000 managers. Economists had forecast an increase to just 85.0 points. The basis was a provisional October value of 84.3.

The index for assessing the current situation of the companies surveyed fell to 93.1 (revised 94.2) points. 93.7 had been expected. 94.1 had been reported provisionally for October. The business expectations index rose to 80.0 (revised 75.9) points. The economists surveyed had expected an increase to just 77.0 points. 75.6 points were originally reported for October. "The recession is likely to be less deep than many had expected," commented the IFO economic researchers on the data.

In the manufacturing sector, the index rose noticeably. Companies were much less pessimistic about the coming months. On the other hand, they rated their current situation worse. Once again fewer new orders were received. Uncertainty about further business development decreased somewhat, but remained at a high level. In the energy-intensive industries, however, it increased again.

The business climate improved noticeably in the service sector. Companies were less pessimistic about the coming months but more dissatisfied with current business. In trading, the index rose again. Traders assessed their current situation somewhat better than before. Expectations even increased significantly.

Despite this, roughly every second company is still pessimistic about the coming months. In construction, however, the business climate also improved. Companies rated their current situation noticeably better. Expectations recovered slightly, but remained clearly pessimistic. The number of new orders decreased again.

For Jörg Krämer from Commerzbank, the increase shows "that companies are recognizing a certain improvement in the general economic conditions". The risk of gas rationing has dropped significantly, and the federal government has massively increased the relief package. "I still expect a recession, but more than ever no economic collapse," said the bank's chief economist. "We're moving out of the zone of fear of doom and into the area of ​​normal worries about a recession. The expectations were catastrophic, now they're just gloomy," said Jens-Oliver Niklasch from LBBW.

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