German business sentiment deteriorates in January - Ifo

The Ifo business climate index fell to 99.1 from 101.0 in December, missing expectations for a reading of 100.6 and hitting the lowest level since February 2016.

Meanwhile, the current assessment index ticked down to 104.3 in January from a revised 104.9 the month before, beating expectations of 104.2.

The expectations index slid to 94.2 from 97.3 in December, versus expectations for a reading of 97.0.

The sub-index for manufacturing fell to 11.2 this month from 14.9 in December, the services index declined to 24.5 from 27.0 and the construction and retail trade gauges slipped to 20.0 and 4.6 from 29.3 and 9.2, respectively.

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "Whatever optimism we had left about the eurozone economy is steadfastly being destroyed by the incoming data. This is a horrible start to the year for German business sentiment, driven principally a plunge in the expectations index to its lowest level since the chaos during the sovereign debt crisis in 2011 and 2012.

"We don’t have any qualitative details in this report, but the message is increasingly clear; weakness in external demand and rising geopolitical uncertainty are now weighing severely on German business confidence. Across sectors, the main declines were recorded in manufacturing and construction, though the level of both remains solid. The services index also slipped, as did confidence among wholesale traders."