German Ifo Business Sentiment At 11-Month Low
March 22 2018 - 3:05AM
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German business sentiment deteriorated to an 11-month low in
March as firms were less optimistic about the months ahead due to
fears of trade conflicts led by the US, survey data from the
Munich-based Ifo Institute showed Thursday.
Elsewhere, the Purchasing Managers' survey showed that the
Germany's private sector expanded at the slowest pace in eight
months in March.
The business climate index dropped to 114.7 from 115.4 in
February, Ifo said. The score was forecast to fall to 114.6.
According to Ifo, companies were slightly less satisfied with
their current business situation, which nevertheless remained at a
high level.
The current conditions index slid to 125.9 from 126.4 in the
previous month. The reading was also below the expected level of
125.6.
Likewise, the expectations index came in at 104.4 in March
versus 105.4 a month ago. The score came in line with
expectations.
Clemens Fuest, Ifo President, said the threat of protectionism
is dampening the mood in the German economy.
Flash data from IHS Markit showed that the composite output
index fell to an eight-month low of 55.4 from 57.6 in February. The
reading was also below the forecast of 57.0.
Although remaining solid overall, growth has now softened in
each of the past two months after having reached a near seven-year
high in January. Nonetheless, a reading above 50 indicates
expansion.
The services Purchasing Managers' Index came in at 54.2 in
March, down from 55.3 in February and the forecast of 55.0.
Similarly, the factory PMI dropped to 58.4 from 60.6 in the
previous month. The expected score was 59.8.
March's PMI and Ifo surveys point to a softening of Eurozone
growth as expected after such a strong run and which has not caused
to change the upbeat GDP forecasts, Jennifer McKeown, an economist
at Capital Economics, said.
But it certainly supports the European Central Bank's cautious
approach to policy normalization, particularly as the PMI price
indices weakened too, the economist added.
The Ifo Institute said on Wednesday that Germany's strong
economic growth is set to continue in the months ahead, as demand
for the country's exports are expected to improve. Gross domestic
product is forecast to grow 2.6 percent this year and 2.1 percent
next year.
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