German Business Sentiment Index Disappoints Once More

The fall, the third in a row, left the Ifo business climate index at 105.7 from 107.3 in January.

It leaves business morale at its lowest level in more than a year.

Ifo economist Klaus Wohlrabe told Reuters that a forecast for 2016 German economic growth of 1.9 percent, published in December, would need to be revised down given the deteriorating outlook.

The latest official figures show that the German business confidence has fallen to a one year low as companies remain pessimistic about their business outlook for the next six months.

German business expectations also fell into negative territory, sliding to 98.8 from 102.2 the previous month and worse than estimates for a dip to 101.6.

However, we can’t say that all was gloom, considering that the current market assessment showed some good improvement even with a pattern of downing expectations on the German business sentiment index.

Germany ran up a record surplus in its public finances in 2015, with Europe’s biggest economy showing “solid and consistent” growth previous year, the federal statistics office said on Tuesday.

German businesses expressed growing concern, especially in manufacturing.

ING’s Carsten Brzeski said the data showed that “global events have finally reached German companies’ boardrooms”.

A detailed report from Destatis today said gross domestic product grew 0.3 percent in the fourth quarter from the third quarter, when it rose at the same pace.

And his forecast for growth of 1.8 percent for this year “could be a little optimistic”, Kipar added.

Investment increased by 2.4 percent quarterly, making a contribution of 0.4 percentage points to the growth, according to Destatis.

Pantheon Macroeconomics said “surging construction investment and government spending were the key drivers of the rise in GDP, offsetting a significant drag from net exports”.

Exports logged a 0.6 percent drop following prior quarter’s 0.3 percent increase.