ifo Business Climate Index Rises Despite Ukraine Crisis (February 2022)
Sentiment in the German economy has improved appreciably. The ifo Business Climate Index rose to 98.9 points in February, up from 96.0 points (seasonally adjusted) in January. Companies were more satisfied with their current business. There was a marked improvement in expectations. The German economy is betting on an end to the coronavirus crisis. However, the escalation of the crisis engulfing Ukraine remains a risk factor.
In manufacturing, the index rose sharply. Companies were clearly more satisfied with their current situation. Their expectations were also more optimistic. Order books grew once again. However, material shortages continue to hamper production.
In the service sector, the business climate improved considerably. The indicators of the current business situation and of expectations jumped higher. The Business Climate Index rose in almost all service industries. Optimism has returned to hospitality.
The business climate indicator rose in trade, too. Businesses were much more satisfied with their current situation. Their expectations also brightened tangibly. Year-over-year sales grew sharply. However, both wholesalers and retailers continue to report supply bottlenecks.
In construction, the business climate improved somewhat. This was due to more positive assessments of the current business situation. The outlook, however, was a little more pessimistic.
Clemens Fuest
President of the ifo Institute
