The ifo business climate survey for July not only puts a big question mark over hopes of an economic recovery in the second half of the year. There is now even the threat of a renewed slide into recession in industry. This has consequences for the investment strategy. Background: If business expectations in industry deteriorate three times in a row after a sustained upswing, this has often signalled a downward economic trend reversal in the past. In this case, the economic component of the private wealth stock market indicator consistently switches from "green" to "red". This is exactly what could happen at the end of August. The background: in the ifo Institute's monthly survey, participants have a choice of three possible answers: They...

The ifo Business Climate Index for June shows a surprisingly significant decline in industry, which is so important for the private wealth stock market indicator. The index for business expectations in the manufacturing sector fell from minus 6.4 points to minus 12.3 points. This is the first decline since December 2023 and a clear damper on hopes for positive economic development in the second half of the year. Why have company bosses suddenly become more pessimistic when the ifo Institute itself has just raised its economic forecast slightly and is now saying that the German economy is on course for recovery? We suspect that two political developments have contributed significantly to this. One is the threat of tariffs on e-cars from...

The ifo Business Climate Index for May continues to point upwards in industry, which is so important for the private wealth stock market indicator. The index for business expectations in the manufacturing sector improved from minus 8.3 points to just minus 5.7. On balance, the number of company bosses who expect a more favourable business trend is now roughly equal to the number of those who anticipate a less favourable trend over the next six months. This underpins the positive assessment of the private wealth stock market indicator for the German stock market, which has been valid since October. In October 2023, the stock market indicator gave a buy signal when the DAX fell below 15,000 points. The equity allocation was initially raised...

We wrote here a month ago that the German economy should have bottomed out in February. The ifo Business Climate Index data for April supports this assessment. Sentiment among companies continued to improve last month, and the stabilisation process of the economy is still proceeding according to the textbook. This can be seen most clearly in the ifo Business Cycle Clock. The German economy is still in the crisis quadrant. However, in April the indicator made a big leap towards the recovery quadrant (Chart 1). The improvement in industry, which is so important for the private wealth stock market indicator, is particularly impressive. The index for business expectations in the manufacturing sector made a big leap upwards (chart 2). In the...

You will probably be startled by the headline "Germany in recession" in the next few days. This is because there is indeed a high probability that the German economy will have contracted slightly in the first quarter of 2024. The official definition of a recession - two negative quarters of GDP in a row - would then be fulfilled. Don't be confused. That is the past. The economic low point should have been reached in February. This is indicated by the business climate survey conducted by the Munich-based ifo Institute. The mood among companies improved considerably in March. The current situation is now viewed more favourably than in the previous month. Above all, however, company bosses' expectations for the next six months were significantly...