Summary: ifo business climate index up again in April; under expected figure; expectations index declines, current conditions index up; index consistent with positive euro-zone GDP growth.
Following a recession in 2009/2010, the ifo Institute’s business climate index largely ignored the European debt-crisis of 2010-2012, remaining at average-to-elevated levels through to early-2020. However, the index was quick to react in the March 2020 survey, falling precipitously. The rebound which began in May of that year was almost as sharp but it was also characterised by a period of below-average readings which lasted until March.
According to the latest figures released by the Institute, its business climate index increased to 96.8 in April. The reading was below the expected reading of 97.8 but 0.2 points above March’s final reading of 96.6. The average reading since January 2005 is just below 97.
In contrast, the expectations index decreased, falling from March’s revised figure of 100.3 to 99.5, also below the generally-expected figure of 101.2. The current situation index rose from 93.1 to 94.1.
“Companies once again raised their assessments of the current business situation. However, they were no longer quite so optimistic about the coming six months. Both the third wave of infections and bottlenecks in intermediate products are impeding Germany’s economic recovery,” said Clemens Fuest, the president of the ifo Institute.
German and French 10-year bond yields slipped a touch. By the close of business, the German 10-year bund yield had inched up 1bp to -0.25% while the French 10-year OAT yield finished unchanged at 0.08%.
Ray Attrill, NAB’s Head of FX Strategy within its FICC division said, “The survey is nonetheless consistent with some lift in activity, with much more to come in the service sector in coming months.”