Germany’s business climate index dips over the Greek issue
The Ifo Business Climate Index in Germany fell to a four-month low in June. The iShares MSCI Germany ETF (EWG) fell by 1.14%, the Vanguard FTSE Europe ETF (VGK) fell by 0.82%, and the SPDR EURO STOXX 50 ETF (FEZ) VGK fell by 0.83% on June 24.
Concerns over the Greece bailout issue have been weighing down European equity this week. German ADRs (American depository receipts) such as SAP (SAP) and Deutsche Bank (DB) fell by 1.3% and 0.92%, respectively. The National Bank of Greece (NBG) ADR fell by 5.71% on June 24 on heightening concern over Greece’s bailout.
The Ifo Business Climate Index
The Ifo Business Climate Index is an important barometer for the German economy. It’s based on about 7,000 monthly survey responses from firms in trade, manufacturing, construction, wholesale, and retail. The Information and Forschung (research) wing of the CESifo Group conducts the survey. The survey’s assessment is based on the responding firms’ evaluations of the current business situation and on their expectations for the next six months. This index is a good gauge for industry and trade conditions in Germany.
June report: “The outlook for Germany is overcast”
There seems to be increased pessimism among Germans with respect to business development in the Eurozone’s strongest economy. The Ifo Business Climate Index fell from 108.5 in May to 107.4 in June. The Ifo Current Assessment Index fell from 114.3 to 113.1 in March. Plus, the expectations index recorded a fall of 1 index point, from 103 in May to 102 in June.
The manufacturing, wholesale, and retail components of the index deteriorated, while the business climate in construction improved for the third month in a row. According to the Ifo President Hans-Werner Sinn, “The outlook for the German economy is overcast.”
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