Ifo continues to creep upward

The Ifo business climate index rose from 88.6 to 89.0 points, marking the sixth consecutive increase.

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Dr Ralph Solveen

Commerzbank Economic Research

08/25/2025

Business expectations improved, while the assessment of the current business situation remained virtually unchanged (poor). However, this result is somewhat puzzling given that the overall index rose slightly while sentiment in all sectors deteriorated slightly. Nevertheless, the improvement in the Ifo index, together with the rise in the purchasing managers' index, is fueling hopes that the economy will pick up in the coming months. However, the still relatively low level suggests that the upturn will be only modest.

Overall index improved, ...

As widely expected, the Ifo business climate improved again in August, although the increase was moderate at 89.0, up from 88.6 in July. As in previous months, it was primarily companies' business expectations that brightened. The corresponding sub-index is now as high as it was at the beginning of 2022 before Russia's invasion of Ukraine. By contrast, the assessment of the current business situation has actually deteriorated slightly, meaning that it has improved only marginally since its low point in fall 2024.

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