German business sentiment unexpectedly deteriorates in April - Ifo
German business sentiment unexpectedly deteriorated in April, according to a widely-followed survey released on Wednesday.
The Ifo’s business climate index fell to 99.2 from an upwardly-revised 99.7 in March, missing expectations for a reading of 99.9.
Meanwhile, the current assessment index came in at 103.3 in April from 103.9 the month before, falling short of expectations for a reading of 103.6.
The index measuring expectations for the next six months declined to 95.2 from 95.6, versus a forecast of 96.1.
Andrew Kenningham, chief Europe economist at Capital Economics, said the fall in the Ifo business climate index was worse than the consensus and its own forecasts, which were for a reading of around 100.
He pointed out that the expectations index is well below its average level in the second half of last year, when the economy contracted.
"While this is not a big fall, the detail is consistent with the negative message from Markit’s Manufacturing PMI, released last Friday, which showed that manufacturing, and particularly the new export orders component, remained very weak.
"Indeed, the manufacturing component of the Ifo business climate index dropped to from 6.7 to 4.0, whereas the services and construction components both rose slightly. The business expectations index published by CES Ifo today is consistent on past form with manufacturing output contracting by around 2% year-over-year.
"This is consistent with our view that Germany’s economy is likely to grow at a very anaemic pace this year, even if there is a slight pick-up in GDP growth in Q1."