DEFINITION of 'Ifo Business Climate Survey'

A key monthly survey that measures the business climate in Germany. It is widely followed as an early indicator of the state of the German economy. The Ifo Business Climate Survey is based on approximately 7,000 monthly survey responses from firms in manufacturing, construction, wholesale and retail. As the largest economy in the European Union, Germany's business climate has implications for the rest of the European Union.

BREAKING DOWN 'Ifo Business Climate Survey'

Firms included in the Ifo business climate survey are asked to submit their assessments of current business conditions and expectations for the next six months. The balance value of the current business situation is the difference in the percentages of the "good" and "poor" responses, while the balance value of the expectations is the difference in the percentage of the responses marked "more favorable" and "more unfavorable." The business climate is a transformed mean of the balances of the current business situation and expectations.

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