The German ifo Business Climate Germany index increased 0.4 pts to 85.1 in January, above expectations of it remaining at 84.7. The Situation index increased 1.0 pts to 86.1 while the Expectations index fell -0.2 pts to 84.2, the lowest in a year.

Manufacturing and construction both saw sentiment decline further, dropping -0.4 pts to -25.3, another post-pandemic low, and -2 pts to -28.2, respectively. Service sector sentiment improved but was still negative at -2.2, and negative trade sentiment was unchanged at -29.5. Manufacturing capacity utilization remained almost unchanged at 76.5%, well below the long-term average of 83.4%.