German business confidence falls in June

• IBTimes RSS
• Print
• E-Mail
• digg
• Del.icio.us

"Dark clouds are gathering over the German economy," said Andreas Rees, chief German economist at UniCredit. "Today's business barometer showed that it is time to say good bye to the so-far outstanding resilience of 'Made in Germany.'"

The Munich-based Ifo institute's business climate index fell to 101.3 points in June from 103.5 points in May, a steeper decline than analysts had expected.

"The sharp hike in oil prices is evidently becoming an increasing burden on the German economy," said Ifo President Hans-Werner Sinn in a statement.

Confidence in the manufacturing sector worsened "significantly," dropping to 8.2 points in June from 15 points the month before, Sinn said.

Alexander Koch, an economist at UniCredit in Munich, said the deterioration in manufacturing points to a slowdown in global demand.

Weaker orders from important euro-zone neighbors also points to "slower industrial dynamic ahead," he said.

The fall in the overall index "underscores that also the German industry cannot decouple from the downswing in its major trading partner economies," Koch said. "Together with the burden of the very high energy prices on domestic demand, we expect further downward movements in German business climate in the coming months."

Firms surveyed by Ifo were more pessimistic both about the current business situation and expectations for the next six months. The current situation index dropped to 108.3 points from 110.1, while the expectations index dropped to 94.7 from 97.2, Ifo said.

In addition to manufacturing, the Ifo study's other industry-specific subindexes were also largely down, with trade and industry falling to 1.7 from 6.1 the previous month; wholesaling falling to 2.1 from 4.0 and retailing falling to negative 6.5 from negative 4.4 the previous month.

• 1
• 2