The Ifo Business Climate index for German trade rose to 108.7 in December from 106.8 in November, according to research by the Ifo Institute for Economic Research at the University of Munich.
For manufacturing, the business climate index rose to 26.4 for December from November’s 22.4, with more optimism for the next 6 months.
The business climate index also improved for construction, retailing and wholesaling. Construction was still at -10.6, up from November’s -14.4, but forecasts are optimistic. Retailers and wholesalers are also expressing more confidence for the next 6 months.
The Ifo Business Climate Index is based on 7,000 monthly survey responses of firms in manufacturing, construction, wholesaling and retailing, which are asked to give their assessments of the current business situation and expectations for the next 6 months. They describe the current situation as “good,” “satisfactorily” or “poor” and their business expectations for the next six months as “more favorable,” “unchanged” or “more unfavorable.” The balance value of the current business situation is the difference of the percentages of the responses “good” and “poor,” the balance value of the expectations is the difference of the percentages of the responses “more favorable” and “more unfavorable.” The business climate is a transformed mean of the balances of the business situation and the expectations. For calculating the index values the transformed balances are all normalized to the average of the year 2000.