Ifo Business Climate Index for Germany
The Ifo Business Climate Index for Germany improved in February 2017. It was 111 this month compared to 109.9 in January. The reading beat market expectations of 109.6. The index measures the sentiment of entrepreneurs about the current business climate and expectations for the next six months.
Why the index showed an improved performance
Overall, the business sentiment in Germany improved in February as compared to January. The confidence of manufacturers and wholesalers rose, while the confidence of retailers and constructors fell in February 2017.
Investor sentiment reached a panic level in July as investors expected trade flows to fall between the United Kingdom and Germany (EWG). Germany is one of the United Kingdom’s largest trade partners. Investors expected the Brexit (EWU) to affect trade flows between the United Kingdom and all the major economies of the Eurozone (EZU) (IEV) (VGK).
The improvement in performance indicates that overall domestic demand and international demand are improving. Investors are feeling positive about Germany’s business condition. Germany is an important member of the Eurozone, so an improvement in its business condition is positive for the Eurozone also.
In the next part of this series, we’ll analyze the performance of Eurozone inflation in January.