Ifo index falls for the second time: Second wave dampens mood in executive floors

The Ifo business climate index fell for the second time in a row in November. Managers are more skeptical about the outlook for their businesses than they have been recently. According to analysts, further setbacks are to be expected – things could only improve again when the vaccination campaign begins.

Despite the prospect of vaccinations against the corona virus, the mood of companies in Germany is continuing to cloud over during the pandemic. The Ifo business climate index fell in November to 90.7 points from 92.5 points in the previous month and thus for the second time in a row, as the Munich Institute announced. Economists polled by Reuters had, however, expected a stronger decline to 90.1 points. "Business uncertainty has increased. The second corona wave interrupted the recovery of the German economy," said Ifo President Clemens Fuest.

For the LBBW chief economist Uwe Burkert, this is the expected significant setback. He expected that expectations in particular would have clouded over significantly. "It is so to speak 1-0 between the lockdown fear and the vaccination hopes. The stable situation so far is positive," says Burkert. Apparently, many companies are now coping with the pandemic situation better. "That doesn't mean they can handle it well, but they adjust to the new circumstances as best they can." For the next one to two months, however, he expects further setbacks. It will probably only go uphill again when the vaccination campaign begins.

The managers assessed the outlook for their businesses much more pessimistically and their situation somewhat worse than last time. The German economy had recovered in the summer after the corona-related slump in spring and had grown by 8.5 percent. According to economists, the economy is threatened with another setback due to the foreseeable extension of the partial lockdown.

The federal and state governments will probably decide on more far-reaching corona measures on Wednesday. At the same time, Federal Health Minister Jens Spahn assumes that the first citizens can be immunized against the corona virus in vaccination centers this year.