The Ifo business climate index for Germany deteriorates further in April

The Ifo business climate index for Germany continue to fall in April. The index dropped to 74.3 points from March’s 85.9. The fall was steeper than consensus expectations of 79.7. The current business situation index dropped to 79.5 from 92.9, while the index for business expectations for the coming six months fell to 69.4 from 79.5. The slump impacted all sectors. The business climate for the construction industry collapsed too.

Given the preliminary and final business climate for March, it can be calculated that the business climate of the companies that answered the Ifo Institute's questionnaire in the second half of March was around 72 points, noted Commerzbank in a research report. Measured against this, the April’s business climate did not worsen any further.

Nevertheless, this does not change the fact that the business climate has dropped more sharply than after the Lehman bankruptcy in autumn 2008, which was the prelude to the severe recession in 2009. This is a further indication that GDP for the second quarter would be lousy, said Commerzbank.

Since the start of the week, several shops have reopened and the car manufacturers are slowly increasing production.

“In the coming weeks, overall economic production should tend to recover somewhat. But the upward movement will be slow; we do not expect a V-shaped upswing”, added Commerzbank.