Ifo Business Climate Index remains weak in January 2026

Sentiment among German companies remained largely stable in January 2026. The ifo Business Climate Index remained at 87.6 points. While the assessment of the current business situation improved slightly, expectations deteriorated somewhat. The German economy is therefore starting the new year without any significant momentum.

Manufacturing industry with positive trend

In the manufacturing industry, the business climate index rose noticeably. Companies assessed their current business more positively and expressed less pessimistic expectations. At the same time, capacity utilization fell slightly from 78.1% to 77.5% and thus remains below the long-term average of 83.2%.

Declining business climate in the service sector

The business climate in the service sector deteriorated. Both the assessment of the current situation and companies' expectations were more cautious. Orders on hand and sentiment fell in logistics and tourism in particular.

Significant improvement in trade

By contrast, the retail sector recorded a significant rise in the index. Companies were more satisfied with the business situation and expectations were less pessimistic. This trend was evident in both retail and wholesale, although the indicators remain below the long-term averages.

Main construction sector stabilizes

In the main construction sector, the business climate brightened, driven by an improved assessment of current business. However, the expectations indicator remained unchanged. The order situation remains weak, particularly in building construction.