German business sentiment weakens in October - Ifo
German business sentiment fell in October amid a rise in coronavirus cases, according to a survey released by the Ifo Institute on Monday.
The business climate index edged down to 92.7 from a revised 93.2 September, coming in a touch below expectations for a reading of 93.0. This was the first decline in the index in the last six months.
Meanwhile, the current situation index rose to 90.3 in October from 89.2 the month before, while the expectations index slipped to 95.0 from 97.4.
Ifo president Clement Fuest said: "Companies are considerably more sceptical regarding developments over the coming months. In contrast, they gave a slightly more positive assessment of their current situation than last month. In view of rising infection numbers, German business is becoming increasingly worried."
ING analyst Carsten Brzeski said the first drop in the Ifo business sentiment index since the lifting of lockdown measures adds to growth concerns for the last few months of the year.
"Looking ahead, as painful as the ‘smart’ lockdowns are for the already hard-hit sectors, the impact on the total economy will be much less accentuated than at the start of the crisis. However, with even more social distancing restrictions on the horizon, there is a significant risk that ‘smart’ lockdowns across Europe turn into more severe ones, which in turn would bring the third quarter rebound to an abrupt halt in the last few months of the year.
"At face value, today’s Ifo index is not weak enough to fear another collapse of the economy but as all of Europe is in the second wave of the virus, today’s Ifo index definitely marks the end of the rebound and the start of double-dip fears."