ifo: Business sentiment improved in Germany

The ifo German Business Sentiment Index rose from 87.7 to 88.4 points in October 2025, exceeding forecasts of 88 points.

The expectations index rose from 89.7 to 91.6, the highest level since February 2022, while the current business conditions index fell from 85.7 to 85.3 points.

“Companies are still hopeful that the economy will pick up momentum next year. However, they assessed the current business situation as slightly worse,” said Clemens Fuest, President of the ifo (ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München e.V.).

In the manufacturing sector, the index rose, with expectations in particular improving. However, companies were less satisfied with current business. The decline in new orders stopped. Capacity utilization increased by one percentage point to 78.2 percent, but is still significantly below the long-term average of 83.3 percent.

In the service sector, sentiment improved significantly. Service providers were less skeptical about the coming months, and their assessment of the current situation improved only slightly. Business sentiment improved in particular among tourism and IT service providers.

In trade, the index also rose, primarily due to less pessimistic expectations. This is particularly true for wholesale trade. However, companies viewed the current situation as somewhat worse.

In the construction sector, the indicator fell slightly. While the current situation was viewed as significantly better, expectations were more pessimistic. According to the ifo survey, the lack of orders remains the central problem in the sector.