The survey results released this morning by Germany’s Ifo Institute were not welcome news for Europe’s largest economy. The overall Business Climate index fell to 101.4, which is the lowest level since February 2010.
The current conditions index fell 0.8 point to 110.3 and the expectations index fell 1.0 point to 93.2. Both figures were weaker than expected.
According to SocGen economist Klaus Baader, this number implies that growth in Germany has effectively fallen to 0%.
Unlike the PMI and ZEW surveys, the ifo did not indicate an improvement in economic conditions in September. The overall index declined 0.9pt to 101.4, driven by weaker expectations (down 1.0pt) as well as a weaker assessment of current conditions (down 0.8pt). Taken at face value, this would suggest GDP growth of about zero in Q3 – which would be slightly weaker than our current forecast (0.05% qoq, 0.7% yoy). The divergence between the ZEW and PMI on the one side and the ifo on the other may be related to the fact that the ifo index has been far less depressed than the other two surveys, each compared to their history.
Here are the charts from Baader.
Photo: Societe Generale
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