• German IFO Business Climate Index declined modestly in May.
• EUR/USD clings to small daily gains but stays below 1.0800.

The headline German IFO Business Climate Index edged lower to 91.7 in May from 93.4 in April (revised from 93.6). This reading came in weaker than the market expectation of 93.

Meanwhile, the Current Economic Assessment dropped to 88.6 from 93.1 and the IFO Expectations Index – indicating firms’ projections for the next six months, improved to 94.8 from 91.7, surpassing analysts' estimate of 91.9.

Market reaction

EUR/USD showed no immediate reaction to this report and was last seen posting small daily gains at 1.0785.

About German IFO

The headline IFO business climate index was rebased and recalibrated in April after the IFO Research Institute changed the series from the base year of 2000 to the base year of 2005 as of May 2011 and then changed the series to include services as of April 2018. The survey now includes 9,000 monthly survey responses from firms in the manufacturing, service sector, trade and construction.