MUNICH, Germany (MNI) – The German economic research institute Ifo
has updated its widely followed barometer of German business sentiment
to reflect recent changes in the structure of industry and trade,
resulting in an upward shift in the indicators.

The new weightings and the shift in the base year from 2000 to 2005
will be applied with the release of Ifo’s upcoming business survey next
Tuesday, the institute said Thursday.

Applying the updated methodology to past results, Ifo found that
the previous survey for April gave an overall business climate index of
114.2 (compared to 110.4 under the old system). The index for firms’
assessment of their current situation rose to 121.0 (116.3), while their
outlook for the six months ahead came to 107.7 (104.7).

The overhaul aims to bring the classification of various branches
of activity “close to the reality of economic developments” and take
account of technological progress, explained Ifo expert Klaus Abberger
in a press release. The new classifications are based on the EU’s NACE
standards.

The switchover brings not only a change in levels for the three
main indicators, but also in past trends, Ifo noted. However, a
comparison of the historical curves for the two methodologies shows that
the cyclical turning points are very little changed and the amplitudes
only marginally different.

The manufacturing sector is most affected, but also retailing and
wholesaling, Ifo said. There are no changes for construction.

The capital goods branch now carries a larger weighting, reflecting
the importance of mechanical engineering and the auto industry and its
suppliers, noted Commerzbank analysts. Weightings declined for the
consumer goods and especially the intermediate goods branches.

The institute provided the following links for previous results:

http://www.cesifo-group.de/link/ifo-geschaeftsklima_e_04_2011_wz03.xls

and for the updated version:

http://www.cesifo-group.de/link/ifo-geschaeftsklima_e_04_2011_wz08.xls

as well as a graphical comparison of the historical results for the
two versions of the headline business climate index:

http://www.cesifo-group.de/link/KT_04_2011_GSK_WZ03-08-en.gif

[TOPICS: M$G$$$,M$X$$$,M$XDS$,MAGDS$]