Ifo Survey (Sep 2020) Preview - 0900BST

Ifo BUSINESS CLIMATE (BC): Bbg Cons: 93.8; Prev (Aug): 92.6

Ifo CURRENT SITUATION (CS): Bbg Cons: 89.5; Prev (Aug): 87.9

Ifo EXPECTATIONS: Bbg Cons: 98.0; Prev (Aug): 97.5

• The Ifo business climate index is projected to rise in September, but the recovery is seen slowing with markets forecasting an uptick to 93.8 after hitting 92.6 in Aug.
• Both the Expectations and the Current Situations index are projected to increase to 98.0 (+0.5pt) and 89.5 (+1.6pt), respectively.
• Expectations recovered rapidly after April's plunge and already shifted above pre-crisis levels.
• On the other hand, CS rebounded only slowly, continuing to see levels below those seen in Feb.
• While the manufacturing and service sector saw expectations increase in Aug, business climate for trade flattened noticeable with companies remaining pessimistic regarding the outlook for the coming months.
• In contrast to other European countries, Germany has not yet tightened restrictions in Sep as a result of rising cases, which is likely to encourage business climate to recover further.
• However, Germany's flash services PMI dropped below the 50-mark this month, while the composite PMI eased to a three-month low, suggesting a downside risk for the Ifo reading.
• On the other hand, the manufacturing PMI surprised with rising to a 26-month high according to the flash results, showing the divergence between the two sectors.