February 2002 - Nr. 2
Ifo Business-Climate Index Begins 2002 on Upbeat Note
TWIG - The Ifo business-climate index, Germany’s key economic indicator, took analysts by surprise on Monday (January 28) when it rose by an unexpectedly strong margin for the month of January, the Handelsblatt reports. The index for western Germany was up at 86.3 points after reaching 84.9 in November and an estimated 85.8 points in December, boosting hopes that Europe’s largest economy is emerging from recession.
Changes to the survey procedure meant that no separate survey was conducted in December. The estimated December reading was based on Ifo’s November and January surveys. German blue chips booked strong gains on the news but the euro did not. In fact it slid to its lowest level in six months in intra-day trading. The expected upturn in the German economy is seen as unlikely to kick in before the end of the first quarter as companies surveyed for the Ifo index provide an increasingly negative assessment of their current situation. January’s improvement in the overall index was thus carried exclusively by the sub-index of future expectations, which continued the trend of a brightening view of prospects for the six months ahead. Wolfgang Nierhaus of the Ifo Economic Research Institute in Munich argues that this is typical of the pattern that emerges in an economic upturn. Nevertheless, he warned that the February Ifo Index would have to indicate a further improvement before the readings could be interpreted as a clear indication of recovery. With the latest improvement in assessments of future expectations, the relevant sub-index has now recovered almost all the ground it has lost since the September 11, 2001 terrorist attacks.
