German Business Morale Falls by More Than Expected in September - Ifo
By Scott Kanowsky
Investing.com -- Business morale in Germany this month slumped to its lowest level since the early days of the pandemic, according to a leading survey of companies in Europe's largest economy.
The reading of the Ifo Institute's business climate indicator for September slipped to 84.3, down from an upwardly revised mark of 88.6 in August and below economists' estimates of 87.0.
It is the gloomiest tally since May 2020, when the index touched 79.7.
Ifo said the decline runs through all four major sectors of the economy - manufacturing, services, trade, and construction. It added that that the pessimism companies have for the coming months has increased "significantly."
Analysts at ING cited soaring inflation as the main driver behind the weakening in business sentiment, saying that the higher prices have increased corporate input costs and dampened consumer demand. The analysts warned that Germany is also approaching a "perfect storm" of challenges, with the war in Ukraine forcing the country to move away from key Russian energy imports, accelerate its transition to green technologies, and restructure supply chains.
"A recession is inevitable. However, contrary to previous recessions like the financial crisis or the pandemic, the German economy doesn’t look as if it is dropping like a stone but rather sliding into a long winter recession," they said.
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