German Ifo business climate index falls surprisingly in December, economy to grow strongly in 2018

The German Ifo business climate dropped surprisingly in December from the prior month. The Ifo business climate for industry and trade index dropped from 117.6 to 117.2, as compared with consensus expectations of 117.5.

The businesses viewed their current business situation more positively, with the index rising to 125.4 from 124.5. But they are not quite positive as they were in November about the outlook for the next six months, which dropped from 111 to 109.5.

According to a Commerzbank research report, the Ifo business climate is still pointing upwards. Secondly, the European Central Bank is a long way from easing economic activity by means of higher key rates. Thirdly, the rise in the remainder of the euro area is still young.

The minor drop in the Ifo business climate was mainly because of business expectations. Some might indicate towards that past trend reversals in the business climate to the downside were mostly initiated by dropping business expectations. But still there is no downsizing in the Ifo expected, stated Commerzbank.

“We expect the German economy to grow at a strong rate of 2.5 percent next year – following an estimated growth rate of 2.3 percent this year”, added Commerzbank.

At 13:00 GMT the FxWirePro's Hourly Strength Index of Euro was highly bullish at 151.901, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -14.2197. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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