In brief

• The Ifo business climate index rose to 90.2 points in October, its sixth straight monthly increase.
• The reading beat the analyst forecast of 89.9 points and is the highest since spring 2023.
• Gains came from brighter expectations, while the assessment of current conditions weakened.
• The survey covers about 9,000 firms despite high energy prices.

Business mood keeps climbing

The Ifo business climate index rose by 0.3 points in October to 90.2, according to the Munich-based Ifo Institute (Ifo-Index: Konjunkturbelebung setzt sich fort – tagesschau.de). The reading was up from 89.9 in September (Konjunkturbelebung - Ifo-Index steigt sechstes Mal in Folge – Deutschlandfunk). It marks the sixth monthly increase in a row and the strongest level since spring 2023.

Expectations outpace current assessment

Analysts had forecast a stall at around 89.9 points, so the result came in ahead of consensus. The gain was driven mainly by firms' brighter outlook for future business. Ifo President Clemens Fuest said the recovery is continuing. Companies' view of the present situation, by contrast, was weaker (Nastroje biznesowe w Niemczech poprawiają się szósty miesiąc z rzędu. Wyzwania pozostają jednak aktualne – Puls Biznesu).

Survey base and backdrop

The index is based on a monthly survey of about 9,000 companies and executives. Commentary attributes part of the improvement to higher spending on infrastructure and defence, which economists say supports growth (Ifo-Geschäftsklimaindex: Stimmung in deutschen Unternehmen verbessert sich erneut – ZEIT ONLINE). Economists expect the recovery to continue, citing a strong order backlog.

Key figures

• Ifo business climate, October: 90.2 points
• Ifo business climate, September: 89.9 points
• Analyst consensus for October: 89.9 points
• Monthly survey sample: about 9,000 firms

Energy costs remain a risk

The improvement came despite elevated energy prices, which continue to weigh on industry (Konjunktur: Ifo-Index steigt trotz teurer Energie sechstes Mal in Folge – ZEIT ONLINE). Whether the upturn broadens will depend on how businesses' current conditions develop in coming months.