Ifo’s Profit Situation Assessments as an Indicator for Earnings Development in Manufacturing

While official data on trends in earnings are available during the year and on a relatively timely basis, the annually published structural statistics generally only appear with a significant time lag. It is particularly difficult to make statements on the current sales situation in an economic sector and/or a branch – especially since sales are a basic determinant of earnings development, but not the only factor. A check of whether company assessments of their current profit situation made as part of the Ifo Business Survey can close the information gap opened up by the time lag in the release of official statistics shows that for manufacturing on the whole, and for many of its individual branches, a higher synchronisation of the results calculated based on official statistics and the results of the Ifo survey prevails. This means that the Ifo assessments of profits are, in the case of manufacturing on the whole, as well as in many of its branches, a relatively reliable and accurate indicator of earnings development.