German Ifo unlikely to resist weaker sentiment in October

In October, the Ifo business climate index is expected to have declined 0.6pt to 107.9. The expectations component should have been more affected by the VW and China uncertainty, while the assessment of current conditions again is expected to hold up better. Despite the weakening, the business climate index remains close to 1 standard deviation above its longterm average, providing a more positive outlook for German economic activity than manufacturing and investor surveys. 

"Since the crises, however, the Ifo indicator has persistently been pointing to somewhat higher growth than was actually the case, so currently we prefer to use the composite PMI for our GDP forecasts, which points to growth of around 0.4-0.5% in Q3 and Q4", notes Societe Generale.