Real Estate and Construction elements of ifo Index jump sharply

More definite signs of improving prospects were evident in the latest German ifo Business Climate Index for June, with Germany’s real estate and construction industry expressing much more confidence about the future than in the darkest days of only a couple of months ago.

Both sectors of the economy are much more confident about the future than in the May reading of the Index. They also assess their current situation as ‘much better’. This fits in with the overall picture of the business climate index, which jumped in June. "The German economy sees light at the end of the tunnel," commented the ifo Institute on the latest reading.

The real estate sector, which is represented in the real estate and housing sector, grew strongly. The index improved by a significant 12.5 points (minus 2.1 to plus 10.4) on the ifo proprietary scale. The industry assessed both its current and future business development and sales expectations much more favorably than in May. It also expects prices to rise and intends to add jobs to it’s the existing workforce.

The index for the main construction industry gained almost five points, with almost all indicators contributed to the rise. Notably, the assessment of the business outlook for the next six months and the expected construction output were much more favourable. Capacity utilization remained almost constant, while the order backlog measured in months rose minimally. Here again, the apparent willingness to hire is growing as the overall mood improves. This indicator turned from -4.5 points to plus (+1.5).