German business sentiment has unexpectedly weakened, according to the latest data released by the Ifo Institute. The Ifo Business Climate Index, a key indicator of German economic health, declined to 87.7 points in September, a drop from 88.9 points in August. This result defied expectations of a slight increase among analysts.
Companies expressed decreased satisfaction with current operations and notably, future expectations have been revised downward, tempering hopes for an economic rebound.
Within the manufacturing sector, the index registered a decline. Businesses assessed their current situation with less optimism and expectations remain more cautious. A decrease in new orders has been observed. The previously noted positive trend among producers of capital goods has faded.
The service sector experienced a more pronounced deterioration in sentiment. Expectations have been sharply revised downwards, pushing the corresponding indicator to its lowest level since February. Companies also adjusted their assessments of the current situation. The transportation and logistics sub-sector was particularly affected.
Business sentiment also softened in the retail sector, primarily driven by more pessimistic expectations. While the retail sub-index saw a slight increase, the wholesale sector experienced a decline.
In contrast, the construction sector index rebounded after a decline in the previous month. Companies reported a slightly improved view of current operations and continued optimism regarding future developments.
