German business confidence deteriorates in January, Ifo shows

German business confidence unexpectedly deteriorated in January, according to a widely-followed survey.

The Ifo Institute’s business climate index fell to 109.8 from 111.0 in December, missing expectations for a reading of 111.3.

Meanwhile, the current assessment index rose to 116.9 in January from 116.7 the month before, while the expectations index dropped to 103.2 from 105.5.

The sub-index for the manufacturing sector fell to 13.8 from 15.4, while the sub-index for construction declined to 10.7 from 13.1.

Holger Schmieding at Berenberg said: “Driven by less optimistic expectations, German Ifo business confidence fell back in January following a strong surge late last year. Few countries depend on free trade in the world as much as Germany does.

"While we should hesitate to read too much into somewhat volatile monthly data, the January correction in expectations could suggest that some German companies are starting to worry about the risks of rising protectionism.”