3 weeks ago
Economic Indicators

German Business Confidence Falls to Near 5-Year Low in February - Ifo

Investing.com - German business confidence hit its weakest level in nearly five years in February with no sign of a

Investing.com - German business confidence hit its weakest level in nearly five years in February with no sign of a turnaround yet in sight, according to a closely-watched business survey released Friday.

The Munich-based Ifo economic institute said its business climate index, based on a monthly survey of companies, declined to 98.5 this month, its lowest level since November 2014.

The reading was worse than economists’ expectations for 99.0.

The forward-looking element of the index, which measures business's expectations, fell even more sharply to its lowest level since 2012, at the depths of the euro's existential crisis.

Germany's export-driven economy, the motor of the euro zone's, has slowed sharply under the influence of the trade war between the U.S. and China, uncertainty over the U.K.’s departure from the European Union and a threats of higher tariffs on German-made vehicles from U.S. President Donald Trump.

The country’s Federal Statistics Office, Destatis, confirmed earlier Friday that gross domestic product stagnated in the fourth quarter, meaning that the economy narrowly avoided a recession after contracting in the previous three months.

Ifo's survey broadly corroborates others from IHS Markit and the ZEW think-tank this week.

Even though ZEW's measure of investor confidence improved to a five-month high, its president Achim Wambach said neither the institute nor the experts it surveyed expect a rapid recovery.

In its latest monthly report, Germany’s central bank, the Deutsche Bundesbank, said that recent weak readings in factory orders and a decline in business confidence suggested little hope of an immediate rebound for the euro area’s largest economy.

It predicted that the “underlying pace of the economy should remain subdued at least in the first half of the year”, although it said “there are no signs that the slowdown is becoming an outright downturn.”