German business sentiment deteriorates further

German business sentiment deteriorated further in July, according to a survey released on Tuesday by the Ifo Institute.

The business climate index fell to 87.3 from a revised 88.6 in June, coming in below expectations for a reading of 88.0.

The expectations index edged down to 83.5 in July from 83.8 a month earlier, while the current situation index printed at 91.3 from 93.7.

The manufacturing index fell to -14.2 from -9.7 while the service sector gauge was 0.9 in July, down from 2.7 in June. The index for trade came in at -23.7 compared to -20.2, while the construction gauge declined to -24.0 from -20.5.

Capital Economics said: "The bigger-than-expected fall in the German Ifo, together with the drop in the PMIs published yesterday, suggest that the German economy continued to shrink at the start of Q3. We expect the recession to drag on throughout 2023."