EU Economy
German business confidence dropped in May
By Michael Hennigan, Finfacts founder and editor
May 23, 2014 - 12:08 PM

German business confidence dropped in May according to the Ifo economics institute at the University of Munich.

The Ifo Business Climate Index for industry and trade in Germany based on a survey of about 7,000 executives, fell to 110.4 points in May from 111.2 points last month. Assessments of the current business situation were no longer as favourable as in April. Companies are also less optimistic about future business developments. A lull was seen in the German economy in May.

In manufacturing the business climate index fell slightly, but remained at a high level. Although assessments of the current business situation improved marginally, manufacturers are slightly less optimistic about future business developments. Manufacturers continue to expect stronger demand for exports.

In wholesaling the business climate index fell markedly, after April’s sharp increase. While assessments of the current business situation were clearly less favourable, assessments of the business outlook deteriorated only marginally. In retailing the business climate also clouded over. Retailers were once again slightly less satisfied with their current business situation. For the first time in six months they were also somewhat pessimistic on balance about future business developments.

In construction the business climate index also declined slightly. Contractors were somewhat less satisfied with their current business situation than in April. The six-month business outlook also continued to deteriorate.

The Ifo Business Climate for the German service sector based on 2,500 responses deteriorated to 21.4 balance points in May from 22.1 in April. Assessments of the current business situation were slightly less favourable than last month, but remain at a high level. Assessments of the business outlook, by contrast, were somewhat more optimistic. Service providers still plan to recruit additional staff.