According to the ifo economic barometer the business climate is cooling off

The Munich based ifo Institute for economic research reports that the industrial business climate index for Germany has fallen by 1.2 points in July currently standing at 105.6 points which means that it remains at a high level. Thus, those companies questioned are not as satisfied any more with their business situations as in the previous month. They see their prospects for the coming six months less optimistic than in June which means that the expectations component of the index fell by 1.6 points to 102.6 points. However, according to the Institute, these figures do not represent a major economic turnaround so that the economy continues its upward trend.

The business climate in the processing industry, however, has cooled off. Those companies interviewed consider their current business situation to be somewhat less promising. Business expectations for the next six months to come were also down. Export opportunities are still seen to be very positive even though to a somewhat smaller extent as compared to previous months. The business climate in the construction industry remained virtually unchanged in July. Here a more positive assessment of the business situation was set off by a more cautious interpretation of economic prospects. On the other hand, the retail business climate index has fallen given that retailers consider their current situation as well as their prospects to be less promising over the next six months. The wholesale trade index, however, has compared to June since companies are quite satisfied with their current situation and optimistic about their business outlooks.

The business index fall in Eastern Germany was below the average decline at Federal scale. According to experts from the ARD, the stock exchange will hardly be affected by these pessimistic forecasts. Economists blame the situation on the future VAT increase, uncertainty with regard to the US economy, the high oil price and not least the disappointment about reforms in Germany.

A detailed presentation of the findings as well as illustrations and tables are available in PDF format for download. GERMAN