The Ifo Business Climate indicator for Germany stood at 85.2 in February 2025, unchanged from the slightly revised figure of the previous month and falling short of the market consensus of 85.8.
German business sentiment weaker than expected
While companies grew more optimistic about their outlook for the coming months (85.4 vs. 84.3 in January), their assessment of the current business situation deteriorated (85.0 vs. 86.0). This mixed sentiment suggests that businesses are cautiously hopeful about future conditions but remain wary of current challenges, reflecting ongoing uncertainties in the economy.
Sector data
Across different sectors, sentiment weakened notably among service providers, with the index for services dropping to -4.3 from -2.2, indicating growing concerns in the sector. The transport and logistics industry, in particular, expressed increased skepticism due to potential supply chain disruptions, higher costs, and the broader global economic slowdown. On the other hand, confidence improved in several other industries, with manufacturers showing a more positive outlook (-22.1 vs. -24.8), traders improving their sentiment (-26.2 vs. -29.5), and construction firms experiencing a slight uptick (-27.6 vs. -28.1).
Recovery in the German economy
These mixed results highlight the uneven recovery across sectors in the German economy, with some industries like manufacturing and construction benefiting from steady demand, while others, particularly in services, continue to face headwinds. Looking ahead, the ongoing challenges of rising energy prices, global trade uncertainties, and potential policy changes are likely to play a crucial role in shaping business sentiment. Market participants will be watching closely for any signs of further divergence in economic performance across industries, as well as for any shifts in government policy that may influence overall economic confidence.
