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Economy in Brief

German IFO Index Strengthens Unexpectedly
by Robert Brusca August 25, 2010

This is the early release of the German IFO report. It shows a much brighter picture of the economy in Germany than had been expected. On first release Germany’s IFO does not provide us with that rich detail for which that the index is so admired. But the early release of major indices shows us an economy with still expanding sector indices.

Germany’s overall business climate reading advanced from 106.2 in July to 106.7 in August. This bucks the trend of weaker August readings we saw in the Zew report and in the PMI releases from Markit. Instead, the German IFO industry level respondents, not the financial experts that Zew surveys use, tell us that after that stellar Q2 German growth figure the economy has kept improving. As of August- two months after the end of the quarterly reporting period for GDP-, things are still improving in Germany. This is an unexpected piece of good news.

The IFO shows continuing gains in the current situation with a slight pull back in expectations (form 105.6 to 105.2) but with strong gains in its current index. The overall business climate index advanced strongly.

IFO Survey: Germany
  Percent: Yr/Yr Index Numbers
Current Mo-Ago Curr/Avg pctile
Biz Climate 17.9% 21.5% 18.4% 20.4% 21.5% 106.7 106.2 111.5% 91.7%
Current Situation 25.7% 26.8% 22.8% 20.6% 19.2% 108.2 106.8 113.8% 77.9%
Biz Expectations: Next 6-Mos 10.5% 16.4% 14.0% 20.3% 23.9% 105.2 105.6 109.2% 98.6%
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