German business confidence slumps in August: Ifo

24th August 2011, Comments 0 comments

German business confidence deteriorated sharply this month, the Ifo economic research institute said on Wednesday.

The monthly Ifo business climate index plunged to 108.7 points from 112.9 points in July, highlighting a sharp slowdown seen also in other recent data.

The result was well below expectations of a decline to 111 points, according to a poll of economists by Dow Jones Newswires, and was the biggest drop since the index lost 4.7 points in July 2008.

It was also the lowest level since June 2010, when it stood at 106.5 points.

"Companies have scaled back their expectations of business developments in the coming half year," an Ifo statement quoted president Hans-Werner Sinn as saying.

"The current business situation, however, continues to be assessed overall as good, although the situation appraisals in recent months were significantly more favourable," he added.

A sub-index that measures companies assessment of their current situation fell to 118.1 points from 121.4 points in July, while expectations for the six months to come dropped to 100.1 points from 105.0 points.

That was the latter reading's lowest level since October 2009.

The survey showed falls in all of its categories -- manufacturing, retailing and construction.

"The German economy is not immune to current worldwide turbulence," Sinn said.

© 2011 AFP

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