• Germany's news in English

German Ifo business sentiment plunges to 34-month low

AFP · 24 Jul 2008, 11:07

Published: 24 Jul 2008 11:07 GMT+02:00

Facebook Twitter Google+ reddit

The monthly business climate index calculated by Munich-based economic research institute Ifo fell to 97.5 points from 101.3 points in June. The last time it was below that level was in September 2005.

Analysts polled by Dow Jones Newswires had forecast a more modest drop in July to 100.2 points.

The index had already fallen sharply in June, and Ifo president Hans-Werner Sinn said the firms questioned "are much more dissatisfied with their current business situation and they are clearly more reserved regarding the six-month outlook.

"These results suggest that the economic upswing is coming to an end," he said.

Ifo's current situation sub-index dropped to 105.7 points from 108.3 in June, while the expectations indicator fell to 90.0 points from 94.6 points. Broken down further, the manufacturing business climate index "has fallen noticeably," the Ifo statement said.

"Export business will no longer expand so rapidly, in the estimation of the manufacturers" and they were les likely to take on additional workers, Ifo found.

Germany is the world's leading exporter and the latest findings are bad news because a hoped for pick-up in domestic consumption has failed to materialize owing to high inflation brought on by surging energy and food prices.

In other key sectors covered by the Ifo index - construction, retailing and wholesaling - "the business climate index is clearly trending downwards," the statement added. "The trading firms have assessed both their current business situation as well as the six-month outlook clearly more pessimistically than in June."

Story continues below…

Ifo surveys roughly 7,000 German companies each month, and its index is considered the most reliable indicator of business sentiment. Although the index remained above its long-term average, "the magnitude of the recent falls is clearly a worry," said Capital Economics economist Ben May.

Taken together with a recent fall in the euro zone purchasing manager's index (PMI), he said available data "suggest that there is a chance that GDP (gross domestic product) contracted in the second quarter and ... there might even be another fall in the third quarter."

That would signal a recession in the 15-nation euro-zone economy.

Facebook Twitter Google+ reddit

Today's headlines
Outrage over ruling on 'brutal' gang rape of teen girl
The now convicted suspects, sitting in court in Hamburg. Photo: DPA.

A 14-year-old girl was gang-raped and left partially clothed and unconscious in freezing temperatures. Now prosecutors are appealing the sentences for the young men found guilty, most of whom will not set foot in jail.

Dozens of Turkish diplomats apply for asylum in Germany
Demonstrators holding a giant Turkish flag protest against the attempted coup in Istanbul in July. Photo: DPA.

Since the failed putsch attempt in Turkey in July, Germany has received 35 asylum applications from people with Turkish diplomatic passports, the Interior Ministry confirmed on Wednesday.

Hertha Berlin fan club criticised for 'anti-gay banner'
Hertha BSC beat FC Cologne 2-1. Photo: DPA

A 50 metre fan banner apparently mocking the idea of gay adoption has overshadowed Hertha BSC's win in the Bundesliga.

Germany stalls Chinese takeover of tech firm Aixtron
Aixtron headquarters in Herzogenrath. Photo: DPA

The German government on Monday said it had withdrawn approval for a Chinese firm to acquire Aixtron, a supplier to the semiconductor industry, amid growing unease over Chinese investment in German companies.

Politicians call for tough sentences for 'killer clowns'
File photo: DPA.

Now that the so-called 'killer clown' craze has spread from the US to Germany, elected officials are drawing a hard line against such "pranks", with some threatening offenders with jail time of up to a year.

Nearly one in ten Germans are severely disabled
Photo: DPA

New figures reveal that 9.3 percent of the German population last year were considered severely disabled.

The Local List
Germany's top 10 most surreal sites to visit
The Upside-Down House, in Mecklenburg–Western Pomerania. Photo: Olaf Meister / Wikimedia Commons

From upside-down houses on Baltic islands to a fairy-tale castle near the Austrian border, Germany is a treasure trove of the extraordinary.

Bavarian critics back Merkel for Chancellor again
Photo: DPA

The Christian Social Union (CSU) have long delayed backing Angela Merkel as their candidate for Chancellor in next year's general election. But now key leaders are supporting her publicly.

Four taken to hospital after hotel toilet bursts into flames
File photo: DPA.

Four guests at a Nuremberg hotel were taken to hospital due to smoke inhalation early Monday morning after a toilet there burst into flames.

Creepy clown scare spreads to Germany
Two of the clowns were apparently equipped with chainsaws. Photo: Pedro Pardo / AFP file picture

Police said Friday five incidents involving so-called scary clowns had occurred in two north German towns, including one assailant who hit a man with a baseball bat, amid fears that Halloween could spark a rash of similar attacks.

10 things you never knew about socialist East Germany
Sponsored Article
Last chance to vote absentee in the US elections
How Germans fell in love with America's favourite squash
How I ditched London for Berlin and became a published author
12 clever German idioms that'll make you sound like a pro
23 fascinating facts you never knew about Berlin
9 unmissable events to check out in Germany this October
10 things you never knew about German reunification
10 things you're sure to notice after an Oktoberfest visit
Germany's 10 most Instagram-able places
15 pics that prove Germany is absolutely enchanting in autumn
10 German films you have to watch before you die
6 things about Munich that’ll stay with you forever
10 pieces of German slang you'll never learn in class
Ouch! Naked swimmer hospitalized after angler hooks his penis
Six reasons why Berlin is now known as 'the failed city'
15 tell-tale signs you’ll never quite master German
7 American habits that make Germans very, very uncomfortable
Story of a fugitive cow who outwitted police for weeks before capture
Eleven famous Germans with surnames that'll make your sides split
The best ways to get a visa as an American in Germany
jobs available
Toytown Germany
Germany's English-speaking crowd