Bankinter | The German Business Climate IFO disappointed in July, weighed down by both Expectations and the Current Situation. The IFO Business Climate index fell in July to 87.0 points from 88.6 previously and 89.0 expected. By components, both the Current Situation and Expectations showed a non-negligible deterioration. The Current Situation stood at 87.1 vs. 88.5 esp. vs. 88.3 previously and Expectations 86.9 vs. 89.3 vs. 88.8. The indicator remains in the recessionary zone for another month.
Opinion of Bankinter’s analysis team: The data is disappointing and the interpretation for the German economy is negative. The figures were consistent with the weakness shown by the Manufacturing PMI (42.6) and the drop in ZEW Economic Sentiment (41.8 versus 47.5 before). A weaker economy gives the ECB arguments to cut rates some more in 2024. After the data the market’s probability of a rate cut at the September meeting is almost 100%.
