German business confidence approaches three-year low
Future economic expectations drive Ifo survey of sentiment lower
Business confidence in Germany fell to a near three-year low, below expectations, as future expectations drove mounting concern for the eurozone’s largest economy.
The Ifo Institute’s business climate index, a closely watched gauge of sentiment, fell to 99.1 in January from 101 the previous month, worse than the 100.6 consensus of analysts polled by Reuters and the lowest reading since March 2016.
“Whatever optimism we had left about the eurozone economy is steadfastly being destroyed by the incoming data,” said Claus Vistesen, chief eurozone economist for Pantheon. “This is a horrible start to the year for German business sentiment, driven principally by a plunge in the expectations index to its lowest level since the chaos during the sovereign debt crisis in 2011 and 2012.”
The measure of finance experts’ views on future economic conditions declined to 94.2, from 97.3 a month earlier, well below the poll of 97.0. The assessment of current conditions came in at 104.3, roughly in line with the consensus of 104.2, down from a revised 104.9 for December.
Friday’s reading comes amid rising fears about a German slowdown and a more prolonged eurozone downturn than initially thought.
In a separate survey released on Thursday, German manufacturers pointed to a January contraction as the IHS Markit manufacturing purchasing managers’ index fell to a four-year low.
Overall eurozone activity decelerated to its slowest pace in more than five years, according to an influential poll of purchasing managers.
Mario Draghi, president of the European Central Bank, on Thursday said geopolitical tensions, Brexit turmoil and financial market volatility were weighing on economic data.