Germany’s Ifo business sentiment index deteriorates in August

Germany’s business confidence has evidently deteriorated. The sentiment unexpectedly fell the most in over four years in August. The business climate index of German-based Ifo dropped to 106.2 points in August from July’s 108.3 points. This is the largest decline since May 2012 and the lowest reading since February this year.

German firms have poorly assessed both the current business situation and the expectations for the next six months, as compared to the earlier month. Germany’s economy has fallen into a summer slump, said Ifo in its press release. The expectations index fell from 102.1 to 100.1 in August, whereas the current conditions index dropped to 112.8 from 114.8.

The manufacturing index dropped again in August. Industrial companies were not much happy with their present business situation. The expectations also clouded over noticeably, decline below their long-term average. The volume of new orders, particularly, fell in August. The business climate index dropped in almost all industry branches. The drop was clearly seen in chemical and electrical industries. Within construction sector, the business climate index continued to be at a record level.

“While the still very good assessments of the current business situation weakened somewhat, the construction firms are slightly more optimistic regarding the coming months”, stated Ifo.