Economic calendar in Europe for Monday, 25 September 2023 is very light, IFO index focus

• This
  snapshot from the ForexLive economic data calendar, access
  it here.
• The
  times in the left-most column are GMT.
• The
  numbers in the right-most column are the ‘prior’ (previous
  month/quarter as the case may be) result. The number in the column
  next to that, where there is a number, is the consensus median
  expected.

Last month’s Ifo was dour:

• the German economy stutters with the services sector also now faltering after the manufacturing recession. The outlook is also looking rather poor and reflects worsening sentiment towards Europe’s largest economy.

As you can see in the screenshot above, there is little positive expected this month either.

ECB speakers include Villeroy (0700 GMT, 0300 US Eastern time), Schnabel, a regular hawk(1300 GMT, 0900 US Eastern time) and President Lagarde (also at 1300 GMT, 0900 US Eastern time). I’ll have more to come on this separately.

—

Background to the Ifo Business Climate Index:

• a widely followed leading economic indicator for Germany.
• published monthly by the Ifo Institute for Economic Research in Munich
• the index is designed to assess the current economic climate in Germany and forecast future economic developments by surveying around 9,000 businesses in various sectors such as manufacturing, construction, wholesale, and retail.

The Ifo Business Climate Index comprises two main components:

1. Business Assessment:

   Businesses are asked to evaluate their current business situation.
   Responses can be “good,” “satisfactory,” or “poor.”

2. Business Expectations:

   Respondents are also asked about their expectations for their business over the next six months.
   Responses can be “more favorable,” “unchanged,” or “more unfavorable.”

Calculation:
The responses to the survey questions are used to construct the two sub-indices: the Ifo Current Business Situation Index and the Ifo Business Expectations Index.

1. Ifo Current Business Situation Index:
   Calculated based on the responses regarding the current business situation.
2. Ifo Business Expectations Index:
   Calculated based on the responses regarding business expectations for the next six months.

The Business Climate Index is then calculated as the average of these two sub-indices.

Interpretation:

• Higher Index Values indicate a more optimistic outlook among German businesses.
  Suggest potential economic growth and increased business activities.
• Lower Index Values indicate a more pessimistic outlook.
  May signal a potential economic slowdown or contraction.

The Ifo Business Climate Index is closely monitored as it provides insights into the economic outlook of Germany, the largest economy in the Eurozone.