German business sentiment deteriorates - Ifo
Business confidence in Germany deteriorated more than expected in May, according to a survey released by the Ifo Institute on Thursday.
The business climate index fell to 97.9 from 99.2 in April, missing expectations for a reading of 99.1
The current situation index declined to 100.6 from 103.4 in April, versus expectations for a reading of 103.5.
Meanwhile, the expectations index was steady at 95.3. Analysts had been expecting a tick down to 95.0.
The manufacturing index edged down to 4.0 in May from 4.1 the month before, while the services sector gauge fell to 20.9 from 26.4. The index for trade declined to 5.4 from 7.1 and the construction index rose to 24.4 from 21.7.
Clemens Fuest, president of the Ifo Institute, said “the German economy is still lacking momentum”. He said that in the services sector, the business climate took a substantial hit, with the sub-indicator of current sentiment in services registering its largest monthly decline since April 2013.
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said the survey looks worse than it is.
“The decline in the business climate index was stung by a big fall in the current assessment index, to 100.6 from 103.4, while the expectations index was unchanged at 95.3. We don’t want to sugar coat these data, but we tend to ignore big moves in the current assessment gauge; the expectations index is the best leading indicator.
“The details were mixed. Sentiment in construction rebounded further, but it fell in services and wholesale trade. Overall, the IFO points to alarmingly low growth in the German economy, but the survey has been too pessimistic recently.”