German Business Sentiment Unexpectedly Worsened in April
German business sentiment deteriorated in April as the mood among manufacturers “worsened markedly,” the Ifo Institute said Wednesday, dampening expectations of an impending pickup in Europe’s largest economy.
“The German economy continues to lose steam,” said Ifo president Clemens Fuest, after the Ifo business-climate index unexpectedly slipped to 99.2 points from a revised 99.7 points in March.
Economists polled by The Wall Street Journal had forecast a small increase in the index to 99.9 points in April.
Illustrating a weaker outlook, the Ifo measure of companies’ expectations slipped following a budding pickup in March.
The German economy had a weak start to the year after narrowly avoiding recession in the second half of 2018, a trend that prompted the government last week to slash its growth forecast for 2019 to 0.5% from an earlier estimate of 1.0%.
But a recent string of brighter forward-looking indicators, such as the ZEW research institute’s latest measure of economic expectations, had pointed to towards a mild pickup in economic activity in the coming months.
The Ifo survey confirms that “the export-driven industry is in recession, whereas the domestic economy remains rather healthy,” said Klaus Borger, an economist at KfW Research. The German economy is experiencing a downturn, but no recession, he said.
Source: Dow Jones