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Economy in Brief

IFO Is Up In Month Diffusion, Indices Gain Too
by Robert Brusca April 27, 2009

The IFO index in German rose in April sparking some optimism that the index has made its financial cycle low.

Sectors are improving across the board. MFG improved forma diffusion reading of -42.9 to -38. Wholesaling improved to -30.6 from -31.7. Retailing is up to -26.5 from -28.3. Services stands at -7 after posting a -10 in March. On construction slipped on the month to -24.3 from -22.1.

The IFO diffusion indices are still deeply into negative territory. The overall index stands in the bottom 5 percentile of its range. The combination of weakness across sectors is clearly unusual since the overall IFO is at a lower position in its range than are ANY of its components. The IFO’s signal joins that of the Zew index and of the Markit MFG and Services sector indices that point to a turnaround but continue to embrace very low current readings

Summary of IFO Sector Diffusion readings: CLIMATE
CLIMATE SUM Current Last Mo Since Jan 1991*
  Apr-09 Mar-09 Average Median Max Min Range % Range
All Sectors -33.1 -36.2 -8.8 -9.3 17.5 -36.2 53.7 5.8%
  MFG -38.0 -42.9 -1.3 0.4 27.5 -42.9 70.4 7.0%
  Construction -24.3 -22.1 -28.9 -30.3 0.7 -50.1 50.8 50.8%
  Wholesale -30.6 -31.7 -14.2 -16.0 24.0 -38.9 62.9 13.2%
  Retail -26.5 -28.3 -15.4 -15.0 21.5 -40.2 61.7 22.2%
  Services -7.0 -10.0 10.9 9.5 28.5 -14.5 43.0 17.4%
* June 2001 for Services
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