The Ifo index for September reached 85.7, marking the service sector's sixth consecutive decline and the construction sector's most negative sentiment since January 2009.
In September, German business morale took a hit, as reported by the Ifo institute’s survey. The business climate index settled at 85.7, slightly surpassing the expected 85.2, as projected by Reuters-analyzed experts. This signifies a sustained decline in sentiment, with the index dropping from the previous month’s 85.8.
The manufacturing sector experienced a modest improvement in the Business Climate Index. Companies indicated increased contentment with their immediate operations, although their future expectations slightly diminished. The gradual decline in order books provided some relief. Conversely, the service sector encountered its sixth consecutive decline in business climate, mainly due to worsening present business conditions. Despite softer revenue trends compared to previous months, there is a hint of renewed optimism for the future, albeit coupled with skepticism.
Trade businesses displayed a more positive outlook, with the index showing an uptick. This increase was driven by less pessimistic future expectations. However, satisfaction with the current situation decreased. Conversely, the construction sector presented a bleak outlook. The Business Climate Index for this sector plummeted to its lowest level since January 2009. Current assessments suffered, and the outlook for the coming months remains highly pessimistic.
Considering the varied sentiments across sectors, it seems the German economy may have reached a low point. While certain sectors such as manufacturing suggest stability, overall sentiment leans towards caution. In the short term, a bearish trend is anticipated, urging businesses and investors to prepare for potential challenges ahead.
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