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
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
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
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.