In April, the IFO business climate index fell for the second month in a row (to 104.4, after 106.7 in March). It was due to a fall in both the current situation and expectations indices. German economic growth appears to be slowing at the beginning of spring but it should benefit from a more positive environment in the second half of the year.
■ In April, the IFO business climate index fell for the second month in a row (to 104.4, after 106.7 in March). Even if still above its long term average (100.5), its decrease is sharp, the largest in one month since May 2012.
■ This decrease was due to a fall in both the current situation and expectations indices. The current conditions index sharply decreased, down 2.7 points from 109.9 in March to 107.2 in April. With the exception of the retail sector, assessments of the current situation deteriorated in all sectors, particularly in manufacturing sector.
■ The expectations index also decreased markedly for the second month in a row, down from 103.6 to 101.6 in April. The business outlook deteriorated in all sectors, particularly in the manufacturing sector despite a rise in export expectations.
■ The IFO survey confirms the PMI survey. The PMI manufacturing headline index, down by 1 point (to 47.9), fell further below the 50-threshold in April. Moreover the composite PMI index for activity, down by 1.4 points in April (to 48.8), fell in contraction zone for the first time since November 2011. This is not a very promising sign for activity at the beginning of the second quarter. Nonetheless both the expectations and the IFO business climate indices remained up in comparison with the end of 2012 and January 2013 and above their long-term average.
■ German economic growth appears to be slowing but it is likely to recover later this year, as exports should benefit from an improvement in world demand.
BNP Paribas