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ifo Revises Business Climate Index

Summary:
The ifo Institute has revised its business climate index. “Service providers will now be included in the overall index as of April 2018”, explains Klaus Wohlrabe, ifo’s Head of Surveys. “Services now represent the major portion of the German economy, and ifo has been publishing a separate survey index on the services since 2005. This important sector will now be an integral part of the ifo Index.” The new index, including the service sector, will be rechristened the “ifo Business Climate for Germany”. In the new version of the index, the large retailing and wholesaling segments will be combined to form the distribution sector. At the same time, the base year has also been updated from 2005 = 100 to 2015 = 100. “That brings the biggest change”,

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The ifo Institute has revised its business climate index. “Service providers will now be included in the overall index as of April 2018”, explains Klaus Wohlrabe, ifo’s Head of Surveys. “Services now represent the major portion of the German economy, and ifo has been publishing a separate survey index on the services since 2005. This important sector will now be an integral part of the ifo Index.” The new index, including the service sector, will be rechristened the “ifo Business Climate for Germany”. In the new version of the index, the large retailing and wholesaling segments will be combined to form the distribution sector.

At the same time, the base year has also been updated from 2005 = 100 to 2015 = 100. “That brings the biggest change”, says Wohlrabe. “Because the new base year 2015 was economically better than 2005, the value of the index will consistently decline by about 10 points. The value for March 2018 is now 103.2 instead of 114.7. We must stress that this is purely a base-year effect and not a plunge in the business cycle.”

Wohlrabe added: “Finally we have made a minor change to how we calculate the composition of branches in order to streamline our methodology.” For the ifo press releases, this means that the extra report on the service sector on the day after the Index is released will be terminated. Instead, industry export expectations will be released one day earlier.” 

Comparison of the new ifo Business Climate for Germany and the previously published
ifo Business Climate for Industry and Trade

(past 12 months, seasonally adjusted) 

 Month/Year 04/17 05/17 06/17 07/17 08/17 09/17 10/17 11/17 12/17 01/18 02/18 03/18
NEW: ifo Business Climate for Germany 
(index  2015=100)   102.7 102.5 103.1 104.1 104.1 104.2 104.9 105.1 104.9 104.7 103.9 103.2
OLD: ifo Business Climate for Industry and Trade 
(index 2005=100)   113.3 114.8 115.4 116.2 116.1 115.4 116.9 117.6 117.3 117.6 115.4 114.7
Source: ifo Business Survey. © ifo Institute

Past 12 months |  PDF Download 

Long time-series of the ifo Business Climate Germany and its components (since January 2005) | XLS Download

Publications

  1. Sauer, Stefan and Klaus Wohlrabe, "Das neue ifo Geschäftsklima Deutschland", ifo Schnelldienst 71 (07), 2018, 54–60, English Version | Details | PDF Download

  2. Sauer, Stefan and Klaus Wohlrabe, "The New ifo Business Climate Index for Germany", CESifo Forum 19 (02), 2018,  Deutsche Version  | Details | PDF Download

Clemens Fuest
Clemens Fuest took over from Hans Werner Sinn as chairman of the IFO Institute in April 2016. He is professor at the Faculty of Economics of the University of Munich.

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