German business sentiment deteriorates in June - Ifo

German business sentiment deteriorated in June, according to a survey released on Monday by the Ifo Institute.

The business climate index fell to 88.6 from 89.3 in May. Meanwhile, the current situation index was flat at 88.3 and the expectations index declined to 89.0 from 90.3.

The manufacturing gauge deteriorated to -9.2 in June from -6.5 a month earlier, while the service sector index ticked up to 4.2 from 1.8.

The index for trade fell to -23.5 in June from 17.0 the month before and the construction gauge was -25.0 versus -25.6.

Ifo Institute president Clemens Fuest said: "The German economy is having difficulty overcoming stagnation."

Capital Economics said the decline in the Ifo indicator in June "to a very low level highlights that even after Germany’s economy grew in Q1, it is far from back to full health".

Jack Allen-Reynolds, deputy chief eurozone economist, said the fall in the business climate index left it below the consensus forecast and at a three-month low.

"The expectations component weakened, whereas the current conditions index was unchanged. But both were very low by past standards. Based on the long-run historical association, the BCI is consistent with Germany’s GDP contracting," he said.

"That said, it has been overstating the weakness in the economy for some time. The PMI has been a better guide recently and while it also declined in June, it still points to a small increase in GDP in Q2. Looking ahead, we expect the economy to continue growing at a slow pace. We forecast GDP to rise by 0.2% in 2024 as a whole."