German Ifo Business Climate Index Rises to 89.4 in April

According to the April survey,

• In April, the Ifo Current Situation Index increased from 88.1 to 88.9, with the Expectations Index up from 87.7 to 89.9.
• The all-important services sector saw business sentiment improve further, rising from 0.4 to 3.2.
• Business sentiment across the manufacturing sector continued to recover, with the sub-index climbing from -9.9 to -8.5.
• The trade and construction segments also saw improving sentiment. Nevertheless, the firms across the two segments remained very pessimistic overall.

Business Sentiment Impact on Expectations of a June ECB Rate Cut

Business sentiment across the manufacturing and services sectors aligned with expectations of an improving macroeconomic environment.

Nevertheless, the April figures will unlikely impact investor bets on a June ECB interest rate cut. The headline Business Climate Index remained below levels in March and April 2023.

Notably, sentiment across the Services sector was optimistic, signaling a similar message to the recent German HCOB Services PMI numbers. The services sector accounts for approximately 70% of the German economy and influences inflation.

In April 2023, the Services Business Climate Index stood at 6.6 compared with 3.2 in April 2024.

EUR/USD Reaction to German Ifo Business Climate Survey

Before the release of the German Ifo Business Climate survey, the EUR/USD rose to a high of $1.07142 before falling to a low of $1.06859.