German business climate weakens slightly in April, adds to signs of weak growth in Q2

German business confidence fell unexpectedly in April adding to the signs that Europe’s largest economy is losing some of its pace. Data released earlier today showed that German Business Expectations, Current Assessment and Business Climate have all missed expectations for the current month. Weaker than expected number serves as a confirmation that overall economic growth is slowing down in the second quarter.

The headline German Ifo Business Climate figure came in at 106.6 points in April versus 106.7 seen in March, and opposed to expectations of 107.1. The Ifo Current Assessment sub-survey, indicating current conditions in Euro zone’s most powerful economy, dropped to 113.2 points, below last month's 113.8 and estimates at the same level.

That said, the Ifo Expectations Index, indicating firms' outlook for the next six months, grew to 100.4 points, beating the previous figure of 100, while the markets had predicted a 100.9 reading. The diffusion index showed improvements in manufacturing and construction sentiment, while readings for wholesale and retail trade dipped, after improving in March. The early timing of Easter this year may have had an impact, so it remains to be seen whether sentiment in these sectors stabilises again in May.

"German companies remain positive about the economy but concerns about weakening exports linked to a slowdown in the United States and China are dampening the mood in German boardrooms," said Ifo economist Klaus Wohlrabe.