German Ifo business climate index seems to have improved just marginally in October

Germany’s Ifo business climate is expected to have improved just mildly in October. According to a Societe Generale research report, the index is likely to have risen to 109.6 from September’s index of 109.5. This would put it at 1.1 standard deviation above its long-term average, hinting at quarterly GDP growth of more than 0.5 percent.

September’s solid recovery makes the index slightly vulnerable to seasonal fluctuations. An equally small drop in the index is expected. Significantly, the underlying trend is expected to be still supportive, with the labor market recording continued strength. This might also lead to certain improvement in other surveys.

While manufacturing appears to have been performing better for some time, there is certain uncertainty in regards to the services sector that appears to have decelerated materially in the summer. German third quarter growth is still likely to have been 0.5 percent in sequential terms, added Societe Generale.