German businesses' sentiments are reportedly on a downturn, according to Ifo.
German businesses are experiencing a worsened state compared to a month ago, as per a survey conducted by the Ifo Institute. One specific sector shows a notably glum outlook.
The sentiment among German businesses has continued to decline in August, as suggested by a survey from the Ifo Institute based in Munich. The Ifo business climate index dropped to 86.6 points from 87.0 points in July, the institute stated. Companies had a more negative view of their present situation, and their expectations for the near future were also more pessimistic.
"The atmosphere is plummeting," remarked Ifo President Clemens Fuest. "The German economy is more and more heading towards crisis." The index significantly dipped in the manufacturing sector, as companies expressed greater dissatisfaction with current business and their expectations sank to the lowest level since February. Companies continued to complain about shrinking order books, as the Ifo reported.
Especially investment goods manufacturers are experiencing tough times. The business climate also decreased in the service sector, primarily due to more reserved expectations. The assessment of the current situation saw a slight decline, while the business climate in retail slightly improved after two consecutive decreases. This improvement was due to milder pessimism among companies.
Construction index remains static
However, retailers reported a greater dissatisfaction with current business. The business climate index in the construction sector remained unchanged. On one hand, companies were marginally less dissatisfied with the current situation, but on the other hand, their expectations slipped slightly, as the institute explained.
The Ifo index is built on around 9,000 monthly reports from businesses in manufacturing, services, retail, and construction. Companies are requested to evaluate their present business situation and predict their expectations for the following six months.
Despite the deteriorating business climate in Germany, the European Union has not yet issued a statement regarding the situation. Countries within the European Union are closely monitoring the situation, as a weakened German economy could have widespread implications.
