The sharp eyed will have noticed that I have copiously refrained from commenting on the unexpectedly high reading obtained in yesterday’s German Ifo Institute Business Climate index. The index registered a slight unexpected increase, but as Ifo President Hans-Werner Sinn notes: “An evaluation of responses submitted before and after the federal election showed a tendency to more unfavourable expectations after than before the election, so the reading may in fact say a lot more about sentiment before rather than after the election.
More informative in many ways may be the Gfk consumer climate survey out today (follow link and click on button). The survey, which attempts to forecast the climate going forward, saw an increase in the number expressing scepticism about private income expectations and the propensity to buy:
“While in August this year the consumer mood was still relatively unaffected by the hike in oil prices and yet fired by the prospects of the elections, both the tax reform and the trend in oil prices seem to have been felt in September. Indicators covering private income and private consumption are particularly affected. Consequently, the consumer climate was also slightly down. In contrast, economic prospects have become more optimistic. The findings of the September survey given below do not reflect the outcome of the recent elections, since the survey was completed just before the date when the elections were held.”
At the present time it is very hard to assess what the impact of Germany’s election stalemate will be on the economic climate moving forward.