German business confidence fell for the first time in five months as companies assess the risks to business from economic sanctions against Russia after its annexation of Ukraine's Crimea province.
The Ifo institute’s business climate index, based on a survey of 7,000 executives, dropped to 110.7 in March after reaching 111.3 the prior month, the highest level since July 2011.
Assessments of the current business situation
rose significantly to reach their highest level since spring 2012. Expectations
for the months ahead, however, clouded over considerably. The majority of
manufacturers nevertheless remain optimistic about the export outlook.
The Ifo Business Climate Indicator for the German service sector continued to fall in March. This was primarily due to a clear deterioration in expectations on the part of service providers, which fell below the long-term average. Assessments of the current business situation, by contrast, were considerably better than last month. Despite a loss of momentum, firms still plan to recruit small numbers of additional staff.
The Ifo Business Survey of the service sector is based on ca. 2,500 monthly survey responses from firms in key segments of the tertiary sector, especially business-oriented segments (excl. distribution, financial services, Leasing, insurance and government). The survey is conducted and calculated in the same way as the Ifo Business Survey of industry and trade. The indicator for the Business Climate in the service sector has not yet been incorporated into the Ifo Business Climate Index for industry and trade.
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