German IFO Business Climate Index declines to 85.7 in August vs. 86.7 expected

• German IFO Business Climate Index came in at 85.7  in August.
• IFO Current Economic Assessment fell to 89.0 this month.
• The August German IFO Expectations Index arrived at 82.6.

The headline German IFO Business Climate Index dropped further to 85.7 in August versus last month’s 87.4 and the market expectations of 86.7.

“This is the fourth decline in a row. The assessment of the current business situation fell to its lowest level since August 2020. In addition, companies are more pessimistic about the coming months. The dry spell of the German economy is getting longer,” the survey findings showed.

Meanwhile, the Current Economic Assessment Index fell to 89.0 points in the reported month, compared with July’s 91.4 and 90.0 anticipated.

The IFO Expectations Index – indicating firms’ projections for the next six months, declined to 82.6 in August from the previous month’s 83.6 reading. The data fell short of market expectations of 83.8.

Market reaction

EUR/USD is holding lower ground on the downbeat German IFO survey. At the time of writing, the pair is down 0.35% on the day, trading at 1.0770.

About German IFO

The headline IFO business climate index was rebased and recalibrated in April after the IFO research Institute changed series from the base year of 2000 to the base year of 2005 as of May 2011 and then changed series to include services as of April 2018. The survey now includes 9,000 monthly survey responses from firms in the manufacturing, service sector, trade and construction.