Summary: ifo business climate index down again in November; less than expected figure; ifo president says second wave has interrupted German recovery; vaccine news “hasn’t altered outlook for most businesses.”
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 survey, falling precipitously. The rebound which began in May was almost as sharp but recent readings have not continued that trend.
According to the latest figures released by the Institute, its business climate index fell to 90.7 in November, its second consecutive month of declines. The reading was just below the expected reading of 90.9 and 1.8 points below October’s final reading of 92.5. The average reading since January 2005 is just above 97.
The expectations index also lost ground, falling from October’s revised figure of 94.7 to 91.5 in November, also below the expected figure of 93.5. The current situation index declined from 90.4 to 90.0.
“The second wave of coronavirus has interrupted Germany’s economic recovery,” said Clemens Fuest, the president of the ifo Institute.
German and French 10-year bond yields increased modestly on the day. By the close of business, the German 10-year bund yield had gained 2bp to -0.56% while the French 10-year OAT yield finished 1bp higher at -0.33%.
ANZ senior economist Catherine Birch said the fall in the expectations index indicates “the vaccine news hasn’t altered the outlook for most businesses.”