GERMAN DATA: Overall Capacity Utilization Is Slowly Rising - IFO

The utilization of available production capacities (complete economy) in Germany rose to 83.6 percent in January 2026 according to IFO data. "This continues a positive trend that likely began in mid-2025 [...] the German economy has apparently left its low point behind and is beginning to recover", they conclude.

• Putting this into context, the institute's statement on the data seems quite broad and based on a longer-term view than the monthly business climate index, which can be prone to volatility at times.
• This follows labour market data which indicated some bottoming out (on balance) and strong December factory orders partially on the back of the government's military equipment ordering programme.
• These will ultimately feed through to industrial production data (which at present remain weak). However, the market should have  broadly priced this in since March when the initial fiscal announcement happened.
• The question is of course how the data compares to previous forecasts. The next update of private sector consensus will be released next Monday by Bloomberg.

Details on the IFO capacity utilization below:

• "At 77.5 percent, capacity utilization in industry in particular is far lower than the long-term average (83.2 percent).
• "At 66.6 percent, capacity utilization in the construction industry was also below the long-term average (69.4 percent), but this temporary decline is not surprising due to the unfavorable weather in many places."
• "At 89.5 percent in January, ifo capacity utilization among service providers was even above the long-term average of 88.7 percent. This is in line with the predominantly positive assessment of the situation by service providers."