For August
Latest Release Provided by: IFO Institute of Economic Research
Official Release: PDF

Expectations Index: 87.0, forecast 90.3, pr. 90.0, 94.7, 97.3 (May)
Current Conditions: 103.2, forecast 104.8, pr. 105.7, 108.3, 110.1 (May)

Firm's assessments of current business conditions and expectations for the coming 6 months worsened in August. The manufacturing index declined sharply from 2.0 to -6.8. The construction index continued to ease from -23.4 to -26.9. The only improvement was a slight one in wholesaling from -7.3 to -5.4. The poor data spells trouble for the Eurozone as a whole because Germany is its biggest economy and has the largest industry in the region. After the report the Euro fell to a 6-month low against the greenback.

From the Release: "The Ifo Business Climate Index for industry and trade in Germany has fallen in August, the third decline of the index in succession. The current business situation has been assessed clearly more unfavourably than in the previous month. In addition the firms also expect a further negative business development in the coming half year. The German economy is encountering an increasingly more difficult situation."

For August
Provided by: ZEW Indicator of Economic Sentiment
Official Release: Press Release

Current Situation: -9.2, forecast 10, pr. 17.0 (Jul), 37.6 (Jun)

German investor confidence improved more than expected for the August period, rising to -55.5 from -63.9 in July. The increase in sentiment was led by falling oil prices and a slide in the Euro which will make European goods less expensive abroad, helping exports. Though the data is a sliver of hope contrasted to the bleak news  coming out of the Euro-zone recently, it is still quite negative, or at recessionary levels. The ECB has acknowledged that the economy is going through a corrective phase which means the 2nd and 3rd quarters will see a "trough" in growth. Weak growth may keep the ECB from hiking rates, even in the face of high inflation like today's German PPI data. 

From the Release: "The ZEW Indicator of Economic Sentiment for Germany improved in August 2008 by 8.4 points and now stands at minus 55.5 points after minus 63.9 points in the previous month. This is still well below its historical average of 28.3 points.

The improvement of the economic sentiment signals that there is only limited fear about an economic downturn among the financial market experts. The recent decline of the oil price and the depreciation of the euro versus the US-dollar should have mitigated the concerns about the economic situation in Germany.

"The financial market experts have for good reason not been impressed by the negative Gross Domestic Product (GDP) growth rate in the second quarter of 2008. Overall, they reckon with a weaker, but all in all robust economic development and rightly do not fear a recession."

For July
Latest Release Provided by: IFO Institute of Economic Research
Official Release: PDF

Expectations Index: 90.0, forecast 93.2, pr. 94.7, 97.3 (May), 96.8 (Apr)
Current Conditions: 105.7, forecast 106.5, pr. 108.3, 110.1 (May), 108.4 (Apr)

Business confidence in Germany took a plunge in July with the overall index declining almost 4 points to 97.5 from June's 101.3. Current conditions and future expectations both deteriorated and the overall reading was the lowest in 3 years. The decline was far below expectations. With the ECB raising rates at a time when firms are already pressured by higher costs due to surging oil, and weaker demand for goods from abroad and domestically, the situation looks to be pointing to weak growth for the second half of the 2nd quarter and perhaps into the 3rd quarter. The ECB may be even forced to revise its growth projections for 2008 as manufacturing and services cool more than expected as well. Below is the summary from the IFO.

The Euro was weaker for a third day against the Dollar, though its decline was tempered overnight, prior to the NY open.

From the Release: "The Ifo Business Climate Index for industry and trade in Germany has fallen again significantly in July following a clear worsening in the previous month. The firms are much more dissatisfied with their current business situation and they are clearly more reserved regarding the six-month outlook. These results suggest that the economic upswing is coming to an end.

In manufacturing the business climate index has fallen noticeably. Satisfaction with the current business situation has declined among the survey participants. They also anticipate weaker business in the coming six months. Export business will no longer expand so rapidly, in the estimation of the manufacturers. Their willingness to take on additional staff has weakened somewhat.

In the other three survey sectors - construction, retailing and wholesaling - the business climate index is clearly trending downwards. In both trade sectors, wholesaling and retailing, the business climate index has fallen significantly. The trading firms have assessed both their current business situation as well as the six-month outlook clearly more pessimistically than in June. In construction the business climate has clouded somewhat. The current business situation has been assessed more unfavourably and the business expectations are more cautious than in the previous month. "

For July
Provided by: ZEW Indicator of Economic Sentiment
Official Release: Press Release

Current Situation: 17.0, forecast 32.9, pr. 37.6

Investor confidence in Germany fell to a record low in July, as a cumulation of factors, detailed below, most likely pushed German GDP into negative territory for the 2nd quarter. The ZEW index tries to predict how conditions will fare in the next six months. With the ECB increasing rates, weaker domestic and foreign demand, and continued turmoil in financial markets the outlook for growth is rapidly deteriorating. 

From the Release: "The ZEW Indicator of Economic Sentiment for Germany dropped significantly in July 2008. The indicator decreased by 11.5 points and now stands at minus 63.9 points after minus 52.4 points in the previous month. This is still well below its historical average of 28.8 points.

The low level of the economic sentiment indicator reflects increased world-wide risks for the economic activity. The high oil price, the strong euro, the crisis in the United States, the interest rate increase by the ECB and weak domestic consumer demand should negatively affect German companies in the next six months. The difficult business environment for German companies is indicated by the continued decline of incoming orders. Due to the strong decrease of incoming orders business expectations dropped remarkably for companies in the up to now strong machine constructing sector."

For June
Latest Release Provided by: IFO Institute of Economic Research
Offcial Release: PDF 

Expectations Index: 94.7, forecast 96.3, pr. 97.3 (May), 96.8 (Apr), 98.4 (Mar)
Current Conditions: 108.3, forecast 109, pr. 110.1 (May), 108.4 (Apr)

The IFO measure of 7,000 German business executives showed a deterioration in sentiment. They expect weaker demand for German exports in the coming month and increases to employment will be weaker as well. The construction industry improved for the fourth time while wholesaling and in retailing the business climate has fallen.

From the Release: "The Ifo Business Climate Index for industry and trade in Germany has fallen significantly in June. The firms have assessed their current business situation clearly less favourably than in the previous month, and they are more sceptical regarding the six-month outlook. The sharp hike in oil prices is evidently becoming an increasing burden on the German economy.

For June
Provided by: ZEW Indicator of Economic Sentiment
Official Release: Press Release

From the Release: "The ZEW Indicator of Economic Sentiment for Germany dropped significantly in June 2008. The indicator decreased by 11.0 points and now stands at minus 52.4 points after minus 41.4 points in the previous month. This is still well below its historical average of 29.2 points.

The economic sentiment indicator seems to have been influenced by different factors. On the one hand, repeatedly decreasing incoming orders indicate that Germany's momentum will loose steam in the next six months. On the other hand, continuing price increases for energy and food are reducing the purchasing power of consumers. Furthermore, loan conditions for companies should worsen as a result of the financial market crisis and the expected interest rate increase by the ECB."

For May
Provided by: IFO Institute of Economic Research

Expectations Index: 97.3, forecast 96.4, pr. 96.8 (Apr), 98.4 (Mar)
Current Conditions: 110.0, forecast 108.0, pr. 108.4

The Ifo Business Confidence Index for Germany showed that it's economy is seen to be sound and is expected to be resislient for the 6 months ahead. As Germany is the largest economy in the EMU, the ECB will note that as signs of economic slowdown taper away, there will be no need to cut rates and no barrier to raise them when they focus entirely on price stability. However, as Ifo president Hans-Werner noted that this only pared some of the losses to the confidence index during April. Also from the release:

In manufacturing the business climate indicator has brightened. Both the current situation and the six-month business outlook have been assessed somewhat more positively than in April. Export opportunities continue to be appraised as good, but firms are not quite as optimistic as in the previous month. They continue to plan moderate increases in employment.

In the construction industry the business climate indicator remains largely unchanged. For the third time in succession, the firms have assessed their current business situation somewhat less critically, but they are more reserved with regard to the six-month outlook than in April. In wholesaling and in retailing, the business climate index has recovered somewhat after clear declines in the previous month. Both wholesalers and retailers have assessed their current situation more favourably, and both are also somewhat more confident with regard to the six-month outlook.

For May
Provided by: ZEW Indicator of Economic Sentiment
Official Release: Press Release

Investor confidence declined in Germany, surprising forecasts on the downside. The slowdown in the US and the consequences for German exports, along with a stronger Euro and higher inflation were all concerns. The current economic situation improved, rising 5.4 points to 38.6.

The ECB has made it clear that they are focused on containing inflation and investors seem to acknowledge that there may not be interest rate cuts coming anytime soon to help boost growth, and may even move to raise rates. German producer inflation came in higher than expected today (5.2% y/y). With inflation continuing to be a concern, the Euro had a strong rally.

From the Release:

"The development of the ZEW Indicator of Economic Sentiment seems to have been mainly influenced by the following two factors. On the one hand, economic expectations for the next six months for the United States and consequently also for the German export industry have increased considerably. On the other hand, inflationary risks remain high. This should negatively affect private consumption in Germany.

German firms were very successful in the first quarter of 2008. However, the economic momentum should gradually loose speed because of increasing refinancing costs and a strong euro. This should have a negative impact on firms.", said ZEW President Prof. Dr. Dr. h.c. mult. Wolfgang Franz."

For April
Provided by: IFO Institute of Economic Research

IFO Business Expectations Index: 96.8, forecast 98.0, pr. 98.4

The measure of German business came in decidedly lower than expected, driving down the Euro after its release. It seems that the German economy may after all succumb to the pressures put on by higher credit costs and a sharp slowdown in the US. The data coincides with weaker manufacturing results yesterday and may give voice to concerns that the ECB should lower rates to counter weaker economic performance, despite high inflation.

From the Release:

"The Ifo Business Climate Index for industry and trade in Germany has clearly fallen in April. The surveyed companies have assessed their current situation clearly more unfavourably than in the previous month. Also with regard to the outlook for the coming six months they are more sceptical than in March. After a brief brightening at the beginning of the year, the survey results indicate a slower pace of business activity. The retarding forces evident since mid-2007 have gained strength again."

For April
Provided by: ZEW Indicator of Economic Sentiment
Official Release: Press Release

As mentioned in the press release, the surprising March figure seems to be an aberration, as the ZEW index showed a souring mood for April. The index fell back near the territory seen 3 months ago in January, when the index slipped to -41.6. April sees the index down to -40.7, with most of the decline attributed to expectations and not the current economic situation.

The Euro did not fall steeply vs. the Dollar following the release but it did halt a small Euro rally seen during the European session. Prior to the NY data dump, the pair was trading nears its open for the session.

From the Release:

"Economic expectations were affected by the extraordinary high price pressure in Germany this month. High rates of inflation reduce the available income of consumers and, hence, weaken private consumption. Low numbers of incoming orders of German companies point to slower growth in Germany as well.

"The slight optimism of the financial market experts last month seems to be only a temporary phenomenon. New record highs of the euro and the oil price have reduced expectations again. However, at the moment there is no reason for exaggerated pessimism. A growth rate for Germany of 1.7 percent this year is still realistic", said ZEW President Prof. Dr. Dr. h.c. mult. Wolfgang Franz.

The assessment of the current economic situation in Germany improved slightly in April. The corresponding indicator increased by 1.1 points to 33.2 points."

For March
Provided by: IFO Institute of Economic Research

IFO Business Expectations Index: 98.4, forecast 97.8, pr 98.2 

The IFO Business Climate in Germany saw improvement the last two month, after sliding for most of late 2007. It has managed to beat expectations the last 4 months, and forecasts call for a decline this month. The German economy has been weathering the recent global slowdown better than its other euro-zone counterparts. Business Conditions continued to impress in March, as it recorded an increase, posting a 104.8 reading. 

Euro Gains More than 135 Pips on Better than Expected Data

The EUR/USD climbed almost 150 pips in the 2 hours following the release of the IFO data. From a low near 1.56 the pair climbed to set a high near 1.5750, but then retreated. About 90 pips of the rally came in the first 15 minutes after 5 AM EST. Prior to the release, the pair had been consolidating around the 1.56 level.

For March
Official Release: ZEW Indicator of Economic Sentiment

The  ZEW Center for European Economic Research said its index of investor and analyst expectations rose to -32 from -39.5 in February. Its the second straight month that the data beat expectations. This data goes hand in hand with the IFO Business Climate Index, which has shown two months of improvement as well. The German economy seems to be weathering the slowdown in the US better than other Euro-zone countries. The EUR/USD rose close to $1.55 after the release, but came down after the Fed announced it would inject money into the banking system. 

"Considering the currently weak figures for economic growth in Germany the financial market experts expect growth dynamics to revive from September 2008 on. In particular, the experts are more optimistic for the growth of the US-economy in the next six months. Moreover, they expect the US-Dollar to appreciate versus the Euro. This should benefit the export-oriented sectors of the German economy. The experts' mood concerning the development of private consumption has also brightened in March.

"The optimism of the financial analysts is presumably based on the hope that the peak of the financial market crisis will be overcome in half a year and that business dynamics will not weaken more strongly than expected to date", said ZEW President Prof. Dr. Dr. h.c. mult. Wolfgang Franz."

For February
Provided by: IFO Institute of Economic Research

The Euro was boosted by news that German firms saw current conditions improving for a second straight month. The Business Climate Index beat expectations for a slight decline. The news is a welcome sign for the European Central Bank, as it tries to balance higher inflation, while simultaneously avoiding a slowdown in the economy. The Governing Council would rather hold rates steady at this point to curb inflationary pressure. The IFO data helps that cause. In the several hours following the release, the EUR/USD climbed 100 pips and was approaching resistance near 1.49.

"The Ifo Business Climate Index for industry and trade in Germany has risen slightly in February. The companies have assessed their current situation even more positively than in January. The outlook for the coming six months has worsened somewhat, however. On the whole, the economic situation of German industry and trade is robust, but the expectations continue to point to a cyclical weakening."

For February
Official Release: ZEW Indicator of Economic Sentiment

"The ZEW Indicator of Economic Sentiment for Germany improved in February 2008 by 2.1 points and now stands at minus 39.5 points after minus 41.6 points in the previous month. This is still well below its historical average of 30.7 points.

The positive development of the economic sentiment for Germany signals that the current crisis is not expected to trigger a downward spiral for the German economy. The expectations rather indicate a cautious recovery by mid-year. According to the financial market experts, this development should be bolstered by an expansive monetary policy in important industrial countries. Moreover, the prospects of German exporters are expected to slightly improve within the next six months."

For January
Official Release from IFO Institute (.pdf)

Business confidence in Germany surprised on the upside and increased for the month of January. It had been at a two year low. The index grew as a result of a more optimistic outlook for the next 6 months, even though the assessment of the current situation declined slightly.

The news reassured German investors that growth will continue, despite the downturn in the US economy. The benchmark DAX stock index soared 6%, and the Euro continued its advance on the Dollar.