German IFO Business Climate Index declines to 86.4 in December vs. 87.8 expected

• German IFO Business Climate Index fell unexpectedly in December.
• IFO Current Economic Assessment declined to 88.5 in the reported month.

The headline German IFO Business Climate Index declined to 86.4 in December from 87.2 in November. Markets were expecting this figure to improve slightly to 87.8.

Meanwhile, the Current Economic Assessment Index came in at 88.5 in the same period, below the November reading and the market expectation of 89.4 and 89.5, respectively.

Finally, the IFO Expectations Index – indicating firms’ projections for the next six months, edged lower to 84.3 from 85.1.

Market reaction to the German IFO Survey

EUR/USD showed no immediate reaction to the disappointing sentiment data and was last seen rising 0.25% on a daily basis at 1.0920.

About German IFO

The headline IFO business climate index was rebased and recalibrated in April after the IFO Research Institute changed the 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.