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German business confidence slumps

Oct 27 2014 15:42

Berlin - Business confidence inside Germany slumped again this month, with the respected Ifo index falling to 103.2, down more than a point from last month's 104.7, as storm clouds gathered over the eurozone.

Some recent economic data has been contradictory, with both consumers and industrial purchasing managers in Germany seeming more confident.

READ: Stagnating eurozone seeks German shift

The climate in business however tracked on a monthly survey of about 7 000 companies by Munich's Ifo institute, is seen as the more accurate guide to where Germany's economy is headed.

The fall is a steeper drop than foreseen by a range of analysts interviewed earlier by the AFX news agency: their average forecast was 104.5. The Frankfurt Stock Exchange's DAX index eased nearly 0.3% after the index was announced and ran at 8 964.

The indicator now stands at its lowest level since December 2012, with business leaders worried that the 18-nation eurozone is slipping back into recession and that international political turmoil and slowing global growth pose a threat to German exports.

READ: Eurozone seeks to soften German opposition

"In manufacturing, the business climate deteriorated significantly. Assessments of the current business situation were markedly less favourable and are now only marginally higher than the long-term average," said Ifo's head, Hans-Werner Sinn.

"Export business expectations, however, was the only area in which manufacturers did express mild confidence."

Ulrich Wortberg of Helaba, a Frankfurt bank, voiced disappointment at the sixth straight monthly fall in the Ifo index.

READ: German exports plunge amid global crises

"It probably means that that a revival of German economic activity is not in prospect in the next few months," he warned.

Joerg Zeuner of the bank KfW warned that concerns about the eurozone were delaying necessary investment.

"We still haven't found the recipe for growth in Europe," he said in a note. The prospect for Germany and the eurozone into the beginning of the new year was for stagnation at best.

ALSO READ: READ: Germany under fire for laggardly reform

germany  |  eurozone  |  economy
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