The mood in the German economy deteriorated significantly in June. The Ifo business climate fell by three points to 88.5 points compared to the previous month, as the Ifo Institute announced on Monday in Munich. It is the lowest level in over half a year. Analysts had expected a decline, but only to 90.6 points on average.
“The weakness in industry in particular is putting the German economy in difficult waters,” commented Ifo President Clemens Fuest. The business climate in the manufacturing sector has deteriorated considerably. But the mood also deteriorated among service providers, in retail and in construction.
The approximately 9,000 companies surveyed rated the future prospects as worse. The corresponding indicator fell significantly by 4.7 points to 83.6 points. The current situation was also rated less favorably than in the previous month, but the downturn was much more moderate at 1.1 points to 93.7 points.
The worse mood comes as no surprise. The purchasing managers’ indices from S&P Global had already deteriorated in the past week. This is also a company survey. Bank economists had subsequently expressed pessimism about economic development in the second half of the year.
The comments on the Ifo figures were similar: there are currently no signs of a strong economic recovery, said the economists at the Landesbank Hessen-Thüringen. The German economy shrank in the winter months. It is questionable whether the turning point will come in the spring.
Landesbank Baden-Württemberg is skeptical: “In the second quarter, too, economic output should go down noticeably overall,” expects expert Jens-Oliver Niklasch. “For the time being, an economic recovery is a long way off.”(dpa)