German business confidence tumbles in April

BERLIN - German business confidence posted a steeper-than-expected decline in April, a closely watched survey showed Thursday, pointing to new pessimism in Europe's biggest economy.

By (AFP)

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Published: Thu 24 Apr 2008, 4:44 PM

Last updated: Sun 5 Apr 2015, 11:43 AM

The business climate index, calculated each month by the Munich-based economic research institute Ifo, dropped to 102.4 points.

Economists polled by Thomson Financial News had forecast the index would fall to 104.3 after unexpectedly rising to 104.8 in March, weighed down by an economic slowdown and the strong euro.

"After a brief brightening at the beginning of the year, the survey results indicate a slower pace of business activity," Ifo chief Hans-Werner Sinn said.

"The forces of a slowdown evident since mid-2007 have gained strength again."

He said the mood had blackened in the manufacturing, wholesale and retail sectors in particular.

The business expectations sub-index, which measures the outlook for the next six months, declined to an indexed 96.8 points from 98.4 points in March.

The business assessment index, which covers current conditions, dropped 108.4 points from 111.5 last month.

For its monthly survey, Ifo polls 7,000 companies about their assessment of current business and their expectations for the next six months.

It is considered the most reliable barometer of the current state of the German economy and its outlook.

Germany had proved surprisingly resilient against the slowdown in the US economy this year but the survey results released Thursday indicated that executives are increasingly gloomy about their prospects.

An analyst at Capital Economics, Jennifer McKeown, held out the prospect that the gloom might prompt the European Central Bank to lower interest rates.

"The headline business climate index is still well above its long-run average of 96.5, suggesting that the slowdown in economic activity should not be too sharp," she said.

"Nonetheless, it might not be too long before further falls in business confidence turn the ECB's attention from upside inflation risks to slowing growth."

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