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The IFO (Institute for Economic Research) is responsible for producing the Business Climate Index each month. Based upon around 7,000 survey responses from senior managers in manufacturing, construction, wholesaling and retailing firms, the Survey is accepted as a sound predictor of German and, by extension, European growth. Respondents are questioned on both the current business situation and expectations over the next 6 months. These results are released in the form of two sub-indices, the average of which is extrapolated to give the headline Business Climate Index. Owing to its forward looking nature, the expectations index attracts the majority of our traders’ attention.
The IFO is a very timely report given that it is released in the same month to which it refers. Also, the IFO has historically had a strong correlation with the US ISM Manufacturing report lending it credibility amongst our traders.
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