German Ifo business climate indicator likely improved in August

The Ifo business climate index of Germany is likely to have rebounded slightly in August. According to a Societe Generale research report, the Ifo business climate index is expected to have risen to 108.5 in August from July’s 108.5 from July’s 108.3. The Ifo business climate indicator continues to be at a historically high level despite the slight, Brexit related, softening in July. This indicates resilient current conditions. Expectations are likely to rebound in August from the Brexit impact while the assessment of current conditions might continue to rise towards the peak levels in 2015, stated Societe Generale.

Meanwhile, the INSEE survey has been providing a significantly better picture of the French economy that the PMIs for some time now. The over business climate in July, and manufacturing confidence, were more than the long-term average of 100. Given the improvement in profit margins of companies, there is no reason for any weakening in August, noted Societe Generale.

“This forecast of 102 for the business climate would be consistent with GDP growth of slightly below 0.5 percent qoq in 3Q16”, added Societe Generale.