Business climate in Germany improves marginally in May

The business climate in Germany improved marginally in May 2022, with the Ifo Institute's seasonally index inching up to 93 compared to 91.91 in April. The index dropped significantly in March, reflecting the concerns about the war in Ukraine and its implications.

The breakdown of the data points to a more pronounced improvement of the current business situation index, which increased to 99.53 from 97.32 in the previous month. On the other hand, the expectations indicator barely changed at 86.90 compared to 86.80 in April, reflecting the elevated uncertainty considering the ongoing military invasion in Ukraine and the corresponding western sanctions on Russia.

Ifo Institute's seasonally index inched up to 93 compared to 91.91 in April

The Ifo abbreviation stands for Information and research (Forschung in German). The indicators are based on a monthly survey among 7,000 responses from companies in manufacturing, construction, wholesaling, retailing and services. They are asked to give their assessments of the current business situation and their expectations for the next six months. They can characterize their situation as "good", "satisfactorily" or "poor" and their business expectations for the next six months as "more favorable", "unchanged" or "more unfavorable". The replies are weighted according to the importance of the industry and aggregated. The balance value of the current business situation is the difference between the percentages of the responses "good" and "poor", the balance value of the expectations is the difference between the percentages of the responses "more favorable" and "more unfavorable". The business climate is a means of the balance of the business situation and the expectations.

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