Wednesday, April 24, 2013

Should the German IFO Chart Be Concerning Us?

On March 27, I posted the chart of the German IFO index with the title, "Should This Chart Be More Concerning?"  While the chart is still at decent levels, it has been clearly declining for over two years. 

The latest reading shows a continued decline:

The Ifo Business Climate Index for German industry and trade fell in April. Although the majority of companies assessed their current business situation as good, they were far more cautious than last month. Their expectations regarding future business developments were also lower. The German economy is taking a breather.

Here's a chart of the data:

 I believe the biggest problem with the above data is the "assessment of business situation" number, which peaked in early/mid-2011 and has been declining since.  And while business expectations and IFO climate numbers bumped higher last winter, they both have moved lower recently.