German business climate index falls again in November

The German business climate continued to decline in November. The Ifo business climate index dropped to 102, slightly below expectations. Both the current business situation and expectations for the months ahead were less favorable in the previous month, although the fall in expectations was slightly more pronounced. A more evident picture than the overall index currently gives a look at the indices for the two most significant sectors.

The mood in November dropped everywhere. Nevertheless, while this signifies that the downward trend will continue in the manufacturing, the service sector index continues to be in its rather narrow sideways trend, which has existed for many years. Currently, sentiment in the services sector is even a bit better than the average for the last two years.

This indicates again that the solid cyclical fluctuations of the past three years came mainly from manufacturing and are thus more likely to be linked to external factors. The reasons for this is mainly due to the development in China, where the government and the central bank have tried in recent years to stop the sharp rise in private debt, which has also been reflected in lower demand for foreign goods.

However, since the start of this year, the reins have been loosened again, so that in spite of the U.S.-Chinese trade conflict demand from China is unlikely to collapse. Rather, there should even be a little more tailwind from this side next year.

“Since the ECB's monetary policy is also pushing domestic demand, which is also indicated by the stable good mood in the service sector, the upturn is likely to continue next year despite the declines in the Ifo and the purchasing managers' indices”, said Commerzbank in a research report.

At 13:00 GMT the FxWirePro's Hourly Strength Index of Euro was slightly bearish at -68.9506, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bullish at 69.5635. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex