FILE PHOTO: A general view shows the skyline of the East city center with the TV tower in Berlin, Germany, November 6, 2018. REUTERS/Fabrizio Bensch/File Photo
July 25, 2019
BERLIN (Reuters) – German business morale plunged in July to hit its lowest level in more than six years, a survey showed on Thursday, in a further sign that a manufacturing crisis is pulling Europe’s largest economy toward recession.
The data bodes ill for Germany’s export-reliant economy which has been hit hard by weaker foreign demand, trade disputes and Brexit uncertainty.
The Ifo institute said its business climate index fell to 95.7 from an upwardly revised 97.5 in June. The July reading undershot a consensus forecast for 97.1.
It was the fourth monthly decline in a row and marked the lowest level since April 2013.
“The most important German economic indicator suggests that the German economy is heading toward a recession,” VP Bank analyst Thomas Gitzel said.
Ifo President Clemens Fuest said the German economy was navigating troubled waters, adding that companies were less satisfied with their current business situation and were also looking ahead with increased scepticism.
“In manufacturing, the business climate indicator is in freefall,” Fuest said, with the sub-index for the sector posting its biggest drop since February 2009.
The Ifo figures chimed with a survey among purchasing managers released on Wednesday that showed the recession in manufacturing worsened in July with the performance of German goods producers dropping to the lowest level in seven years.
(Reporting by Michael Nienaber, editing by Paul Carrel)
