German business confidence deteriorates more than expected - Ifo
German business confidence deteriorated more than expected in December, according to a widely-followed survey released on Tuesday.
The Ifo business climate index fell to 101.0 from 102.0 in November, missing expectations for a reading of 101.8.
Meanwhile, the current assessment index declined to 104.7 from a revised 105.5, falling short of expectations of 104.9.
The expectations index slipped to 97.3 in December from 98.7 the month before, versus expectations of 98.3.
The sub-index for manufacturing declined to 14.8 from 17.7 in November, while the service sector index slid to 26.8 from 30.7. The sub-index for trade printed at 9.1 in December from 9.8 the month before and the construction index was steady at 29.6.
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "These are disappointing headlines. The expectations index rose encouragingly in August, but it has been falling since, making a four-year low this month. Across sectors, sentiment in manufacturing, services, and trade weakened, while it remained unchanged, within whiskers of a cyclical high, in construction.
"Overall, this survey is downbeat at the moment, but it points to surging growth in construction, which has a high multiplier on growth."
Andrew Kenningham, chief global economist at Capital Economics, said the fall in the Ifo business climate indicator to a 27-month low adds to evidence that the slowdown is not just temporary.
"At face value, the Ifo still looks consistent with annual GDP growth of around 2%, which would be above Germany’s trend growth rate of around 1.5% and, of course, much stronger than Q3’s 0.2% contraction. We know that activity was affected by temporary disruption to vehicle production in Q3, related to the new emissions standards, so there is every reason to expect a rebound in Q4.
"And further ahead, the fall in oil prices looks set to provide some support to consumer spending, particularly given the strength of the labour market. However, this survey adds to evidence that the slowdown in Germany, and the euro-zone more widely, is more than just a soft patch. The upshot is that the risks to our forecast for GDP growth in Germany to rebound, from 1.5% this year to 1.8% next year, are clearly mounting."