Germany: Business confidence deteriorates further in September
The ifo Business Climate Index fell from 99.6 in August to 98.8 in September, with the index consequently dropping further below the 100-threshold that separates pessimism from optimism among firms.
The downtick came on the back of less upbeat views regarding the current situation, while expectations deteriorated. Sentiment has been weighed down by supply-side constraints amid a shortage of raw materials and intermediate products, denting economic activity as the manufacturing sector is experiencing a bottleneck recession. Moreover, diving sentiment in the manufacturing sector chiefly drove the downtick of the headline reading; sentiment in the services and construction sectors improved, while confidence in the trade sector was virtually unchanged.
Carsten Brzeski, global head of macro at ING, added:
“The trend is clear: Down. However, compared with the second quarter, the current assessment component—which traditionally has the closest link with actual GDP growth—was still higher in the third quarter, indicating that the loss of momentum may only show up in the hard data in the final months of the year.”