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Economy in Brief
German PPI Accelerates
The German year-on-year PPI has generally been decelerating since early 2017...
U.S. Leading Economic Indicators Signal Continued Expansion
The Conference Board's Composite Index of Leading Economic Indicators increased 0.3% during March...
Philadelphia Fed Factory Conditions Improve; Prices Jump
The Philadelphia Fed reported that its General Factory Sector Business Conditions Index rose to 23.2 during April...
U.S. Initial Claims for Unemployment Insurance Are Little Changed
Initial unemployment insurance claims slipped to 232,000 (-6.1% y/y) during the week ended April 14...
U.K. Retail Sales Fall
U.K. GDP is expected to cool its jets when the first quarter GDP number is released...
by Louise Curley September 24, 2012
The German IFO business climate index fell in September to 101.4 (2005=100) from 102.3 in August. It was for the fifth straight month of decline. The climate is determined by current conditions and expectations, both of which declined. The former from 111.1 in August to 110.3 in September and the latter from 94.3 in August to 93.2 in September. The indexes of the Business Climate, Current Conditions and Expectations for the next six months are shown in the first chart. Economists had generally been looking for an improved climate due to better expectations as a result of the European Central Bank President Draghi's determination to save the Euro with, in part, an unlimited, though conditional, program of bond purchases. Expectations the financial community represented by the ZEW index had earlier become less pessimistic about the next six months as a consequence of Draghi's announcement. The business community, however, appears to be more skeptical than the financial community.
This was not the first time that the business and financial communities differed in their expectations for the next six months. The second chart shows the expectations of the financial community, as reported in the ZEW survey and the expectations of the business community as reported in the IFO survey. The data are shown in terms of percent balances. Opinions in the financial community tend to be much more volatile than those in the business community or, to put it another way, opinions in the business community are slower to change than those in the financial community. In spite of the improvement in the expectations of the financial community, there are still 18.2% more pessimists than optimists, while in the business community, there are slightly fewer, 16.9%, pessimists over the optimists.
IFO (2005=1000 | Sep '12 | Aug '12 | July '12 | June '12 | May '12 | Apr '12 |
Climate | 101.4 | 102.3 | 103.2 | 105.2 | 106.8 | 109.7 |
Current Conditions | 110.3 | 111.1 | 111.5 | 113.8 | 113.2 | 117.7 |
Expectations | 93.2 | 94.2 | 95.5 | 97.2 | 100.7 | 102.6 |
ZEW Expectations | -18.2 | -25.5 | -19.6 | -16.9 | 10.8 | 23.4 |
IFO Expectations | -16.9 | -15.0 | -12.3 | -9.1 | -2.1 | 1.6 |