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 business climate index in wholesaling fell. Wholesalers were somewhat less
satisfied with their current business situation. They were also slightly less
positive about their short-term business outlook. In retailing, the business
climate index edged upwards. Assessments of the current business situation,
which were already very good, showed significant further improvement. Retailers,
by contrast, were less optimistic about future business developments.
The business climate index continued to fall in construction. Assessments of the
current business situation were fractionally more favourable. The six-month
business outlook, on the other hand, continued to cloud over, but remained
significantly higher than the long-term average.
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
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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