German business sentiment deteriorates in December
German business sentiment deteriorated in December amid worries about coronavirus, according to a survey released on Friday by the Ifo Institute.
The business climate index fell to 94.7 from 96.6 in November, missing expectations for a reading of 95.3.
The current situation index declined to 96.9 in December from 99.0 the month before, while the expectations index printed at 92.6 versus 94.2.
The manufacturing gauge rose to 17.3 from 16.7, while the service sector index slumped to 4.5 from 11.6. The index for trade fell to -4.1 in December from 2.7 in November, and the construction gauge declined to 7.4 from 11.7.
Ifo President Clemens Fuest said: "Sentiment at German companies has clouded over for Christmas. The deteriorating pandemic situation is hitting consumer-related service providers and retailers hard."
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "Overall, these numbers support our view that economic growth in Germany is now slowing, sharply. The expectations index has fallen for six months on the trot and is now as low as it was at the beginning of Q4 last year, when the economy eventually shrunk by a bit over 2.0%, in Q1, due a resurgence in the virus.
"We expect a much better outcome now, but as we explained in yesterday’s PMI note, we’ve nudged our near-term forecasts down significantly, all the same. We now think the Germany economy will expand by 0.4% quarter-on-quarter in Q4, before grinding to a near halt in Q1, with GDP rising by 0.1%."