German Ifo business confidence unexpectedly deteriorates

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

The Ifo Institute’s business climate index fell to 106.2 from 108.3 in July, missing expectations for a reading of 108.5.

The expectations index dropped to 100.1 from 102.1, falling short of forecasts of 102.5.

Finally, the index of current conditions missed estimates of 114.9, printing at 112.8 from 114.8 in July.

“The German economy has fallen into a summer slump,” the Ifo said.

Stephen Brown, European economist at Capital Economics, said: “August’s sharp fall in the German Ifo survey points to a slowdown in German economic growth.

“Both the current conditions and expectations balances of the Ifo survey fell, suggesting not only that growth might have decelerated in Q3, but also that conditions are unlikely to pick up over the later stages of the year.”

Carsten Brzeski, ING chief economist for Germany and Austria, said the weak August Ifo survey suggests German business confidence has been struck down by the Brexit vote.

"Oops. It seems that German businesses always take a bit longer to digest the news but today’s Ifo suggests that German businesses have suddenly woken up to Brexit reality.

"Today’s Ifo reading is a good reminder that the relative benign reaction of Eurozone data to the Brexit vote should not be taken as given. The negative confidence impact is for real."