Germany’s Ifo Business Climate index has experienced a noteworthy increase in October 2024, rising to 86.5 from 85.4 in September. This marks the first upward movement in five months and exceeds expectations, which had forecasted a value of 85.6. According to Ifo President Clemens Fuest, this change signals a temporary halt in the economy’s decline, though he notes that expectations remain cautious despite the brighter outlook.

Increase in Business Climate Index

In October 2024, the Ifo Business Climate index rose to 86.5, an increase from 85.4 in September. This marks the first uptick in five months and surpasses forecasts that had anticipated a figure of 85.6.

Current Conditions and Expectations

The rise in the Business Climate index is also reflected in improvements in the sub-indices. The Current Conditions index improved to 85.7, up from 84.4, while the Business Expectations index increased to 87.3 from 86.4. This suggests that while businesses are slightly more optimistic, there remains a degree of skepticism about sustained growth moving forward.

Sector-Specific Insights

In the manufacturing sector, the downward trend appears to have paused, attributed to less pessimistic expectations. However, manufacturers continue to face significant challenges, particularly a lack of orders, with capacity utilization falling by 1.2 percentage points to 76.5%, considerably below the long-term average of 83.4%. Conversely, the service sector is showing signs of recovery, particularly in logistics, tourism, and IT, indicating a positive shift in overall sentiment in those areas.