· The IFO released its survey detail for its sector results previously announced for November. The IFO headlines are dropping steadily and consistently.  Manufacturing, while showing some bounce in other recent surveys, is giving off strings of negative readings that reflect diminished growth from one year ago and fading prospects. In fact the IFO activity response is weaker Y/Yr for three months running. Demand is off for at least five months running. ‘Foreign orders on hand’ has been the slowest series to react but it is now down Yr/Yr for two months in a row.

· The current situation is evaluated as steady for the last two months running. It remains in nearly the top 5% of the range for current situation historically. But business expectations continue to erode. They are still in the top one third of their range, but barely.

· In the outlook for the next three months conditions are slipping. Retail orders expectations are erratically moving lower although this month interrupted a two month period of severe Yr/Yr drops. Wholesaling is however weakening rapidly and severely compared to its year ago levels. Export business expectations are consistently weaker than they were a year ago. Employment expectations continue to improve. Surely if the other trends are valid, that one can’t last.    

IFO Survey: Germany

Percent: Yr/Yr

INDEX NUMBERS

Nov-07

Oct-07

Sep-07

Aug-07

Jul-07

CURRENT

Average

Percentile

Biz Climate

-1.5%

-0.9%

0.7%

0.8%

104.2

95.8

81.0%

Current Situation

-3.1%

-2.1%

-1.3%

2.5%

2.4%

110.4

94.9

84.8%

Biz Expectations: Next 6-Mos

-2.0%

-0.7%

-0.4%

-1.1%

-0.9%

98.3

96.7

67.3%

Manufacturing:

Nov-07

Oct-07

Sep-07

Aug-07

Jul-07

CURRENT

Average

Percentile

Current Situation

MFG

0.0%

0.0%

0.8%

4.4%

4.4%

111.1

92.5

94.8%

Biz Expectations: Next 6-Mos

MFG

-2.9%

-2.4%

-1.5%

-1.9%

-0.5%

97.3

96.5

67.1%

Activity (m/m)

MFG

-3.2%

-5.3%

-4.5%

1.0%

-1.8%

101.7

97.0

72.8%

Demand M/M

MFG

-5.6%

-8.4%

-6.4%

-2.8%

-3.3%

99.2

97.1

61.9%

Orders on hand

MFG

-4.7%

-7.9%

-4.6%

-2.4%

-2.7%

101.1

96.5

68.9%

Foreign orders on hand

MFG

-1.9%

-0.4%

0.5%

2.5%

2.0%

109.7

94.7

91.7%

Yr/Yr percentage changes in underlying Indices

IFO outlook for 3-Months ahead

3-Mos ahead

Percent: Yr/Yr

INDEX NUMBERS

Expected Activity

Nov-07

Oct-07

Sep-07

Aug-07

Jul-07

CURRENT

Average

Percentile

MFG

-2.3%

-1.9%

-1.0%

2.4%

1.0%

101.3

96.8

85.6%

Orders expectations

Retail Orders

4.0%

-12.0%

-8.0%

3.0%

4.0%

-8.8

-17.7

76.8%

Wholesale

-10.0%

-12.0%

-13.0%

-5.0%

-5.0%

5.5

-13.8

80.2%

EXPORT Biz Expectations

MFG

-3.3%

-3.8%

-2.4%

-0.1%

-0.9%

103.1

98.5

87.7%

Employment Expectations

MFG (Since June 1997)

1.6%

1.6%

3.1%

3.1%

6.2%

105.5

96.1

97.7%