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Germany Ifo business sentiment rises in September, outlook stays pressured

The Ifo survey showed the business climate index at 89.9, but higher energy prices and risks from around $100 oil and rising bond yields could weigh on the outlook.

Reported · Written up by our desk · Central Banks

Germany business sentiment improved in September, with the Ifo business climate index rising to 89.9, above the 89.1 expected reading, and edging up from 88.8 in the prior month, according to Forexlive. The report said the index climbed to its highest level since May 2023.

Forexlive also cited firmer forward-looking gauges, with the Ifo business expectations index increasing to 90.4 versus 89.3 expected, up from 89.0 after a revision. It added that the current assessment index rose to 89.5 from 88.5, also beating the 89.0 estimate.

While the trend points to improving sentiment heading into the end of the third quarter, Forexlive said the outlook remains challenging. The article pointed to higher energy prices as a key concern, noting oil could stay near $100 and contribute to inflation pressures, potentially raising input costs and output charges for businesses.

The report also flagged rising bond yields as another headwind, saying it could tighten financial conditions and make credit conditions harder. Forexlive concluded that it remains to be seen how much the improved sentiment will translate into stronger hard data in the months ahead.

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