Germany: Business confidence falls to a 9-month low
July 22, 2011
Business confidence deteriorated in July, with firms signalling concerns that the strong regional austerity measures and a clouded outlook for the U.S. economy are likely to jeopardize profit growth. The business confidence index published by the Ifo Institute fell from 114.5 points in June to 112.9 points in July and marked the lowest level in business sentiment since October 2010. The reading surprised market analysts on the downside, as they had only foreseen the index falling to 113.7 points. As a result of the monthly fall, the index now sits 1.9 points above the confidence level registered in the same month last year. The July deterioration reflected firms' less positive assessment about their current business situation, with the sub-index edging down over the previous months, which, nevertheless, had marked the highest level since records began. In addition, businesses' future prospects declined for the fifth consecutive month, falling to the lowest level in nine months.
Author: Ricardo Aceves, Senior Economist