Germany IFO Business Climate Index

by Stephan Smith on May 28, 2012

When it comes to assessing the overall economic situation of the German economy, the IFO Business Climate Index is a report you may want to familiarize yourself with. Compiled by the CESifo Group, which consists of organizations like the Center of Economic Studies (CES), CESifo GmbH and the IFO Institute, the Germany IFO Business Climate Index is assembled by gathering responses from 7,000 surveys provided by various manufacturing, construction, wholesaling, and retail firms in Germany.

The type of responses that are given by the various German firms include individual assessments of current economic business conditions and short/medium term (usually about 6 months) expectations of future business conditions. Due to the comprehensiveness of the responses provided, the IFO Business Climate Index is considered a current and early indicator of economic confidence and development in Germany.

How The Report Is Presented

Once all the responses from the 7,000 surveys are gathered and summarize, the Germany IFO Business Climate Index is presented in a written summary and as an index number. The higher the index number, the more positive and optimistic the report; the lower the index number, the more negative and pessimistic the report.

Why This Report Is Important?

Germany is currently the largest economy in the Euro Zone. Any economic developments in the German economy is bound to have affect on the entire Euro Zone economic body. Changes in the Euro Zone’s fundamental economic statistics is going to catch the attention of the monetary policymakers at the European Central Bank; the very same monetary policymakers whose actions influence the euro’s trading price relative to other currencies and commodities. Because of that fact, currency traders and other global investors have added the Germany IFO Business Climate Index to their arsenal of key economic reports to observe.

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