EU Economy
German Ifo business confidence index dipped in June
By Michael Hennigan, Finfacts founder and editor
Jun 24, 2014 - 9:19 AM

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The German Ifo business confidence index dipped in June, signalling that companies in Europe's largest economy are worried about sluggish Eurozone growth and political crises in Ukraine and Iraq.

The survey of 7,000 executives showed a drop to 109.7 from 110.4 in May - - the institute is based at the University of Munich.

On Monday we reported that Eurozone economic growth slowed for a second month running in June, easing to the weakest since December, according to the flash reading of the Markit Eurozone PMI (purchasing managers' index). Growth remained robust in Germany despite weakening slightly, and France's downturn deepened. Elsewhere across the region, however, growth was the strongest since August 2007.

In manufacturing the business climate index fell considerably. Manufacturers assessed their current business situation as somewhat less favourable than in May. Expectations even fell to their lowest point for over six months. Although the export outlook clouded over considerably, the majority of manufacturers remain optimistic.

In wholesaling the business climate improved. After a sharp drop in May, assessments of the current business situation were far more favourable, but wholesalers are less optimistic about the future. In retailing the business climate brightened considerably. Assessments of the current business situation reached their highest level in over two years. The business outlook also improved.

In construction the business climate index improved slightly after four successive decreases. Assessments of the current business situation remained almost unchanged at a high level. Contractors are also somewhat more optimistic about future business developments.

The Ifo Business Climate for the German service sector rose to 25.2 balance points in June from 21.5 points last month. Assessments of the current business situation soared to their highest level since spring 2007. Service providers are also more optimistic about future business developments and plan to recruit 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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