Germany: Business confidence falls again in June
June 24, 2019
German business confidence tanked, dropping to the lowest level since November 2014 in June and closing the second quarter on a sour note. The ifo Business Climate Index came in at 97.4 in June, down from 97.9 in May. The headline figure mainly reflected pessimism regarding the economic climate in the months ahead; the outlook on the current situation improved slightly.
Mirroring the trend witnessed in PMI data, confidence among manufacturers dropped again in June as it has done for over a year now, while business expectations turned pessimistic once more, due to declining order books, after a brief uptick in May. Sentiment also worsened among service providers, and this was mainly due to business expectations: firms’ views on the current business situation improved. Construction companies also saw a reduction in confidence levels, although sentiment remained at a high level despite a drop in both the assessment of the current situation and expectation. In contract, firms in the trade sector became more upbeat regarding the current situation and the expected climate.
“Fear of losing. That is the best summary of the current state of Germany’s businesses”, commented Carsten Brzeski, chief economist at ING Germany. “Once again, it is well-known uncertainties that are weighing on German business sentiment. The German economy currently is the best showcase model for a broader phenomenon: the stark discrepancy between external risks and uncertainty and solid domestic fundamentals.”
Author: Jan Lammersen, Economist