Ifo the business climate index is an indicator for the development of the economic situation, erstellter of ifo Institut for economic research at the University of Munich, in Germany.

Monthly about 7,000 enterprises of the processing trade, the building main trade, the wholesale and the retail trade are asked to judge their present state of business and to communicate their expectations for the next six months.

The enterprises can mark their situation more unfavorably more favorably by "well ", "satisfying "or "badly "and their business expectations for next six months as "", "directly lasting "or "". The balance value of the present state of business is the difference of the percentage shares of the answers "well "and "badly ", the balance value of expectations is more favorably "and "more unfavorable "the difference of the percentage shares of the answers ". The business climate is a transformed average value from the balances of the state of business and expectations. For the computation of the index values the transformed balances are standardized in each case on the average of the yearly 2000.

For the USA the most important business climate index of the ISM Manufacturing is the most important indicator to the Konjunturprognose

Criticism

Ifo the business climate index measures only the business climate, not however on which it be based. The business climate of entrepreneurs can become also with removing economic achievement more positively, so e.g.:

1. if competitors bankruptcy went (in ifo the index not to be the no more counted) and their market shares by the remaining to be only taken over to be able.
2. Subsidies of the state increase.
3. Net yield growth by pure cost savings, e.g. substantial personnel reduction.
4. increasing fiscal depreciation possibilities by outsourcing.
5. sinking capital and profits taxes, which lets the profits increase also with equal lasting turnover figures.
6. one Kreditinstitut or Insolvenzverwalter is, who generally profits from the failure or the increased credit needs of others.
7. Chance for the establishment of a monopoly exists, that in the future the prices to dictate can etc.

The business climate index indicates therefore only the purely subjective business climate to the asked one, economic tendencies can from it not be derived.

Related links

• Ifo business climate with the institute for economic research
• ifo Institut
• ifo business climate index and GRP consumer climatic index before value added tax increase

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