European Economics: Germany - Ifo signals improved mood amongst businesses in July

Research evidence excerpt

European Economics: Germany - Ifo signals improved mood amongst businesses in July

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27 Jul 2026 07:44:32 ET │ 10 pages

European Economics

Germany - Ifo signals improved mood amongst businesses in July

CITI'S TAKE

The Ifo Business Climate index for July surprised to the upside, driven by a

noticeable uptick in the expectations component. However, a significant

share of questionnaires might have been returned before the flare-up in

Middle East tensions. Michel NiesAC

+44-20-7986-3303

The Ifo Business Climate index for July came in at 86.6, up from 85.7 in June michel.nies@citi.com

noticeably beating consensus forecasts of 86.0. The upside surprise was driven by

a a quite sizeable uptick in expectations from 84.3 to 86.7, which was particularly

pronounced in manufacturing and retail. The indicator aiming to capture the

assessment of the current situation, on the other hand, decline somewhat, from

87.0 to 86.5.

Normalisation to disappointing post-Covid standards? In certain aspects, the data

suggests that companies have gotten used to the volatile environment and that the

energy price shock is, for now, not weighing additionally on the economic prospects

beyond what has already been incorporated into the outlook. Expectations are

gradually returning towards levels seen at the start of the year, but still remain lower

for the time being and the balances are in negative territory in any case. The 'price

pipeline' looks like it has calmed somewhat too, especially for consumer goods.

Hiring expectations are low, but stable, and Business Cycle 'traffic light' stands just

below the threshold at which an expansion is probable with a likelihood of 2/3 or

more. In very broad terms, the modest manufacturing recovery that already started