Ifo Business Climate Index Falls Sharply in May 2012

Results of the May 2012 Ifo Business Survey

The Ifo Business Climate Index for industry and trade in Germany fell significantly in May. Assessments of the current business situation deteriorated clearly. The business outlook nevertheless remains above the long-term average. Companies also expressed greater pessimism about their business outlook. The recent surge in uncertainty in the Eurozone is impacting the German economy.
The business climate index in manufacturing dropped sharply. This is primarily due to much poorer assessments of the current business situation. As far as the six-month business outlook is concerned, positive and negative expectations roughly balance each other out. The majority of manufacturers reported defensive recruitment plans for the first time in months. However, they expect further stimulus from exports.

The business climate clouded over significantly at both levels of trade. Assessments of the current business situation slumped in retailing and the majority of expectations are pessimistic. In wholesaling the downturn was relatively small. The wholesalers surveyed saw deterioration in their current business situation and are less optimistic about their six-month business outlook.
The business climate indicator also dropped in construction. While the current business situation showed a slight improvement, the constructors surveyed were less optimistic about future business developments.
Hans-Werner Sinn
President of the Ifo Institute

For detailed results click here.

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Ifo Business Climate Index Falls Sharply in May 2012