ifo Business Climate: The third rise in a row

The mood in German companies improved further in July. This is shown by the latest survey of the ifo Institute. The business climate index has risen from 86.3 to 90.5 points in the last four weeks. This is the third time in a row that this important pulse monitor for the German economy has accelerated. According to the common rule of thumb, this is considered a reliable indicator of a turning point. It can thus be assumed with some certainty that the German economy is now in a recovery phase again after the deep corona-induced slump in spring.

In fact, the business expectations of companies for the coming months are more positive than they have been for around 1 1/2 years. This also shows that the German economy is convinced that the worst of the corona crisis has been overcome and that there will be a strong recovery in the third quarter.

However, companies are still a long way from the „normal state“. They still assess the current business situation as very weak and the recovery is likely to take some time. After all, the infection figures worldwide are still very high, and the risk of a second wave in the coming months in Germany as well remains. This, too, should ensure that despite all the optimism, the outlook for the near future remains cautious.

The road back to normality has only just begun. It is likely to be quite long and may also involve some temporary lows.

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