German business confidence unexpectedly drops in December

German business confidence unexpectedly fell in December, according to a widely-followed survey.

The IFO Institute’s business climate index slipped to 108.7 from 109 the previous month, falling short of analysts’ expectations for a flat reading.

Meanwhile, the expectations index was unchanged at 104.7 and the index of current conditions nudged down to 112.8 from 113.4.

“Overall, the survey seems consistent with our view on German growth. The current conditions index has drifted lower since August, consistent with a moderately slower pace of German growth at the end of the year,” said BNP Paribas.

“The expectations index, however, has trended up over the same period, suggesting some scope for a pick-up in the first half of 2016. This would be in line with the accommodative stance of monetary policy, the lagged impact of a weaker EUR and a moderate loosening in fiscal policy.”