German business confidence worsened to a one-year low

German business sentiment weakened for a tenth straight month in September to the lowest level in as many months as companies were less satisfied with their current situation amid sluggish economic activity, an ifo institute survey showed Monday.
The business climate index fell to 85.7 from 85.8 in the previous month. Nevertheless, the value was higher than economists' forecast (85.2).

Although companies were less satisfied with the current situation, their pessimism about the coming months has dissipated a bit, ifo institute president Clemens Füst said.

"The German economy is standing still," Füst added.

Commerzbank economist Jörg Kramer said the trend of the Ifo index was still clearly falling after four previous sharp falls in a row.

Massive increases in key interest rates in the eurozone and many other countries also point to a recession, and an additional burden is the high level of uncertainty among companies about the government's economic policy, Kramer added.

German business confidence worsened to a one-year low

In its latest monthly report, the Bundesbank said the economy will contract slightly in the third quarter as private consumption is unlikely to make a positive contribution.

With real household incomes flat in the coming quarters and industrial and construction companies facing a sharp decline in new orders, the economy is likely to shrink further in the fourth quarter, Capital Economics economist Francisca Palmas said.

The ifo business conditions indicator fell to 88.7 from 89.0 but remained above the expected level of 88.0.
In contrast, the business expectations index rose to 82.9 in September, in line with expectations, from 82.7 a month earlier.
Manufacturers' confidence improved moderately. Companies were slightly more satisfied with their current businesses. Meanwhile, their expectations weakened slightly and remained pessimistic.

In the services sector, sentiment declined for the sixth consecutive month, reflecting a marked deterioration in the current business situation. On the other hand, expectations improved slightly but remain characterized by skepticism.

Confidence in trade improved in September. This was due to less pessimistic expectations, but businesses were less satisfied with their current situation.
In construction, the business climate index fell to its lowest level since January 2009. Companies continue to rate their current situation as the worst. Moreover, forecasts for the coming months remain extremely pessimistic.
FX24

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