German business sentiment falls in December amid ‘persistent’ weakness By Reuters
Written by Rachel More
BERLIN (Reuters) – German business behavior was worse than expected in December, a survey showed on Tuesday, weighed down by pessimistic company reviews for the coming months amid political uncertainty and an industrial slowdown in Europe’s biggest economy.
The Ifo Center said that the business climate index dropped to 84.7 in December from a slight decrease compared to 85.6 last month.
Analysts polled by Reuters had predicted a reading of 85.6.
“The weakness of the German economy has become permanent,” said Ifo president Clemens Fuest.
The survey of about 9,000 business executives found an improvement in the assessment of current conditions, but the expectations index fell to 84.4 in December from 87.0 in November. Economists polled by Reuters had forecast a reading of 87.5.
The re-election of Donald Trump as US president and the war in Ukraine, coupled with the political conflict at home before the vote that took place in February, added uncertainty at a time when the German economy is already struggling to find any direction.
On the cusp of a second consecutive year of contraction in 2024, next year is expected to bring further challenges as German factories continue, with big names like Volkswagen (ETR:) looking to cut production, and consumer sentiment falling on feared job cuts.
“Both the manufacturing industry and the service industry are giving thumbs up. In the service sector, the opportunities for a poor labor market will probably be seen slowly but surely,” said Thomas Gitzel, economist at VP Bank Group.
