Sentiment among German businesses is better than ever. The ifo Business Climate Index rose from 115.3 (seasonally adjusted) points in September to a new record high of 116.7 points this month. Companies are very optimistic about the months ahead. They also upwardly revised their very favourable assessments of the current business situation. Germany’s economy is powering ahead.
In manufacturing the index also hit a new record high. Manufacturers were markedly more satisfied with their ongoing business. Optimism about the business outlook also surged to its highest level to date in 2017. The main drivers behind these developments were capital goods producers, and especially mechanical engineering firms. Capacity utilisation in manufacturing rose by 0.4 percentage points to 87.1 percent. It is now significantly higher than its long-term average of 83.7 percent.
In wholesaling the business climate cooled down, but remains at a high level. Wholesalers were less satisfied with their current business situation. They were also slightly less optimistic about their business outlook. In retailing the business climate index soared. Assessments of the current business situation were far better and retailers also expressed greater optimism about the months ahead. More retailers plan to increase prices.
In construction the index continued its record run. This was once again primarily due to more optimistic business expectations on the part of contractors. However, they scaled back their very good assessments of the current business situation somewhat.