German business confidence declines more than expected in September, according to Ifo Institute.
Business sentiment in Germany saw a sharp decline in September, surpassing expectations and marking the fourth consecutive month of decline. This drop reflects the ongoing challenges facing Europe’s largest economy, further complicating recovery efforts.
The Ifo Institute reported that the business climate index fell to 85.4 in September from 86.6 in August, falling short of analysts’ expectations, who had projected a reading of 86.0.
The president of the Ifo Institute confirmed that the German economy is facing increasing pressure over time, indicating that these figures reflect the economy’s struggles under the current conditions.
A survey of approximately 9,000 company managers revealed that the vast majority perceive the current economic situation to have deteriorated significantly. The current conditions index dropped to 84.4 in September from 86.4 in August, falling below economists’ expectations, which had forecast a reading of 86.0.
An Ifo economist explained that the German economy stands on the brink of a downward spiral that could deepen in the coming months. With the economy contracting in the second quarter, it is expected that this decline will continue into the third quarter. Recession is typically defined as two consecutive quarters of economic contraction.
Future expectations also worsened, with the index dropping to 86.3 in September from 86.8 in August, reflecting growing pessimism about the economy’s near-term performance.
This decline in business sentiment spared only the construction sector, while the manufacturing sector experienced its sharpest drop since June 2020, highlighting the significant challenges facing the German economy across various sectors.
