German Ifo Business Climate Rises: Are Investors Optimistic?

According to a report provided by the Ifo Institute for Economic Research, the German Ifo Business Climate Index is 117.5 so far in November 2017 compared to 116.8 in October 2017. The index is beating the market expectation of 116.6.

The index is at an all-time high. The constant rise is signaling that investors could be optimistic about the economy and its demand outlook. The sentiment for manufacturers improved from 31.1 in October to 33.1 in November 2017. The sentiment for wholesalers also improved from 18 in October to 25 in November 2017. However, the sentiment for construction and retail declined in November.

The overall improving business sentiment could be signaling that businesses are positive about the country’s growth outlook. Improving consumer spending for Germany’s and the Eurozone’s (VGK) (IEV) domestic and overseas (ACWI) demand is the main driver of investor sentiment.

The iShares MSCI Germany ETF (EWG), which tracks the performance of Germany (DAX-INDEX), has risen 0.8% so far in November 2017. The iShares MSCI Germany Small-Cap ETF (EWGS), which tracks the performance of the small-cap stocks in Germany, has risen 2.3% so far in November as of November 24, 2017.

In the next part of this series, we’ll look at the Eurozone’s consumer confidence in November 2017.