German business confidence deteriorates in December - Ifo
German business confidence unexpectedly deteriorated in December, according to a widely-followed survey released on Tuesday.
The Ifo business climate index declined to 117.2 from an upwardly-revised117.6 the month before, missing expectations for a reading of 117.5.
However, the current assessment index rose to 125.4 from 124.5, beating expectations for a reading of 124.7, while the expectations index fell to 109.5 from 111.0, falling short of forecasts of 110.7.
The manufacturing index fell to 31.7 in December from 33.1, while the construction index rose to 18.9 from 17.2. The wholesaling index dropped to 22.5 from 25.0 in November and the index for retailing increased to 15.7 from 13.1.
Jennifer McKeown, chief European economist at Capital Economics, said: "December’s small decline in German Ifo business sentiment suggests that neither the uncertain political backdrop nor the prospect of European Central tapering have done much to dent optimism about 2018."
Still, she pointed out that the drop in the business climate index did not fully reverse November’s rise and said it is still very close to a record high.
"On past form the BCI still points to a sharp rise in annual GDP growth from Q3’s 2.7% to around 3.5%."
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "The uptrend in the German Ifo appears to have run out of steam, but the survey continues to signal robust Q4 GDP growth in the German economy.
"The details were mixed, but consistent with firm growth across all key sectors. Sentiment in retail and construction rose, while it dipped slightly from a high level in manufacturing. The headline wholesale index also fell slightly. Overall, this report suggests that activity in Germany, mainly in manufacturing, cooled slightly at the end of 2017, but the main story remains one of GDP growth well above 2% year-over-year."