German business assessment of current climate climbs to 2 year high

The IFO index on businesses assessment of the current business climate in Germany has risen to its highest level since June 2014, according to a report published by CESifoGroup on Monday.

IFO Business indices rise

The IFO current climate index came in at 109.5 for September, rising 3.2 points from the previous month. This measure beats estimates by 3.1 points. The index last recorded a figure this high more than two years ago, reaching 109.7 in June 2014.

The IFO current assessment and future expectations indices also beat estimates, rising to 114.7 and 104.5 respectively.

Recent data suggested adverse Brexit effect on Euro-Zone economies

Recently, data has been suggesting, that the Euro-Zone and Germany in particular have felt some adverse economic pressure since the UK’s decision to leave the European Union.

After the latest ECB monetary policy decision, President Mario Draghi stated, that the Euro-Zone recovery seems to be on track, thanks to effective monetary policy. However, he admitted, that the recent Brexit vote has had some negative effects on European economies.

Inflation has not been approaching the sought after two percent target, with business as well as investor sentiment has been falling slightly.

Yesterday, data published by Markit economics indicated a reduction in growth in the services sector. The Markit PMI Services fell from 51.7, the previous month, to 50.6 in September.

Last Tuesday, the ZEW Survey indicator for economic sentiment in Germany came in at 0.5. This measure missed expectations by two points and represented no improvement to August’s figure.

Economists and entrepreneurs remain faithful

However, Mario Draghi and the ECB have been confident that the adverse impact of economic uncertainty following the UK’s Leave vote can be tackled.

The latest data on German business sentiment seems to show that German entrepreneurs agree with this notion and are hopeful for the future.

Katharina Fleiner 26/09/2016
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