The mood among German companies brightened slightly in October: the ifo business climate index rose to 86.5 points, after 85.4 points in September. This marks the first increase after four consecutive declines. While companies assessed their current situation more positively, expectations remain cautious. The German economy was able to stop the recent downward trend for the time being.
The downward trend in the manufacturing sector did not continue. Less pessimistic expectations helped keep the climate stable, although many companies continue to assess their current business situation critically and worry about a lack of orders. Capacity utilization also fell by 1.2 percentage points to 76.5 percent and is still below the long-term average of 83.4 percent.
More positive signals come from the services sector, where the business climate returned to positive territory. The mood improved noticeably, particularly in the logistics, tourism and IT sectors. The expectations of service providers also brightened slightly.
The index also increased slightly in trading. Here, companies were somewhat more optimistic in their expectations, even if current business is currently rated as less satisfactory.
The construction industry, on the other hand, is more skeptical about the future. Expectations deteriorated, although the assessment of the current situation was slightly more positive.
Overall, developments suggest that the German economy has stabilized after months of decline – albeit with cautious optimism.
