German business sentiment deteriorates more than expected - Ifo

24th Sep 2024 10:23

(Sharecast News) - German business sentiment deteriorated more than expected in September, according to a survey released on Tuesday by the Ifo Institute.

The business climate index fell to 85.4 from 86.6 in August, versus expectations for a reading of 86.1.

Meanwhile, the expectations index printed at 86.3 in September, down from 86.8 the month before, and the current situation index was 84.4, down from 86.4.

The manufacturing index fell to -21.6 in September from -17.8 in August, hitting its lowest level since June 2020. The services sector gauge declined to -3.5 from -1.3, while the index for trade came in at -29.8 versus -27.4 a month earlier. The gauge for construction rose to -25.2 from -26.8.

Ifo Institute president Clemens Fuest said: "The companies were particularly less satisfied with the current business situation. The outlook for the coming months continues to decline. The German economy is coming under ever-increasing pressure."

Franziska Palmas, senior Europe economist at Capital Economics, said: "The recent deterioration of activity surveys suggests that, after contracting by 0.1% in Q2, the German economy probably shrank again in Q3.

"Admittedly, the BCI has overstated the weakness of the economy over the past year and 2% q/q contraction that it points to seems way to big. However, the composite PMI, which has had a better track record, is also pointing to a fall in GDP, of around 0.4% q/q.

"We are currently forecasting a 0.2% q/q contraction in Q3 and stagnation in Q4, but the risks are clearly skewed towards a worse outcome."