ifo
May 12, 2010
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Ifo Business Climate Germany
Ifo Business Survey April 2010
Ifo Business Climate Remains Buoyant
Results of the April 2010 Ifo Business Survey
The Ifo Business Climate for industry and trade in Germany improved again strongly in April. The firms are considerably more satisfied with their current business situation, this survey component having now improved strongly for the second month in succession. Also with regard to the business outlook for the coming half year, the surveyed firms are again more optimistic than before. The German economy has shifted into a higher gear.
In manufacturing the business climate index has risen once more. The manufacturing firms have again given clearly more favourable assessments of their business situation. Also with regard to their business expectations in the coming half year they are more hopeful than in the previous month. They also see better opportunities for exports. Currently, the firms are utilising their equipment and machines at a clearly stronger rate than at the beginning of the year. The capacity utilisation rate in industry is now somewhat below the long-term average. Company plans to reduce personnel are again more seldom.
The business situation has also brightened further in retailing and in wholesaling. In both distribution sectors the firms have assessed their current business situation more positively than before. They also view the six-month outlook less critically.
In construction the business climate index has fallen slightly after having risen four times in succession. The current business situation is assessed by the building contractors as clearly more favourable than in the previous month. However, with regard to business developments in the coming six months they are not quite as optimistic as they were in March.
Hans-Werner Sinn
President of the Ifo Institute for Economic Research at the University of Munich
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Ifo Business Climate Germany - Results of the April 2010 Ifo Business Survey (23 Apr 2010) (pdf)
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Explanatory note
The Ifo Business Climate Index is based on ca. 7,000 monthly survey responses of 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”, “satisfactorily” 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 of the percentages of the responses “good” and “poor”, the balance value of the expectations is the difference of 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 calculating the index values the transformed balances are all normalized to the average of the year 2000.
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