German Ifo Confidence Falls as Businesses Fear Fewer Orders

germanEmployees assemble the body shell of a Volkswagen Phaeton automobile on the production line at the Volkswagen AG factory in Dresden, Germany. Photographer: Krisztian Bocsi

German business sentiment unexpectedly slipped to the lowest level in six months in August in a sign that companies are still weighing the consequences of Brexit on future demand.

The Munich-based Ifo institute’s business climate index fell to 106.2 in August from 108.3 in July. That’s the lowest since February. The median estimate in a survey of economists was for an increase to 108.5.

With the U.K. acting as Germany’s third-largest export market, weaker demand there has the potential to damp output in Europe’s largest economy. Company executives have struck a cautious tone in the past weeks, even as earnings at the nation’s blue-chip firms beat estimates by more than 10 percent in the second quarter and the Bundesbank predicted solid and broad-based growth in the coming months.

Ifo’s measure of expectations dropped to 100.1 from 102.1, while an index for current conditions fell to 112.8 from 114.8, according to the report.
The euro slipped after the report and traded at $1.1274 at 10:05 a.m. Frankfurt time.

German manufacturing cooled in August and the services sector posted its weakest performance in 15 months, according to a survey of purchasing managers by IHS Markit. The economy expanded 0.4 percent in the second quarter, with trade, private and government spending all contributing to growth.

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years' experience as a foreign exchange research analyst and trader. A graduate of University of East London, U.K. and a vivid financial markets analyst.

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