Down for the second consecutive month the Ifo index on German business confidence in August, weighed down by difficulties on procurement.
The indicator stood at 99.4 points, against 100.7 in July (revised data) and against the expected 100.4. Concerns are growing especially in the hospitality and tourism sectors.
The Ifo index, which is based on a survey of 9,000 companies and gives a glimpse of economic activity, it deteriorated again this month. “The shortcomings in the supply of semi-finished products and fears of an increase in infections from Covid-19 weigh on the economy “, the Ifo explained in a note.
Even if companies consider the current situation to be better, with an index of 101.4 compared to 100.4 in July, the outlook has deteriorated significantly: this component that measures expectations has fallen from 101.0 last month to 97. August 5, against the expected 101.1.
“Supply problems in the industry are proving to be more persistent than expected and are weighing on production despite good demand,” he commented. Fritzi Koehler-Geib, economist of the state bank Kfw. “This situation is counteracting the propensity of consumers to spend their savings,” he added.
In detail, themanufacturing industry suffered particularly, with the expectations indicator at its lowest level since November 2020. Indicators for the services and commerce sectors also worsened, while business sentiment in the construction sector improved.
“The decline has accelerated from the previous month,” he notes Elmar Völker, Lbbw analyst. The assessment of the current situation makes it probable an “acceleration” of growth in the third quarter, notes the expert, but “uncertainty and caution increase” for the end of the year.
The Ifo, closely followed by the markets, had not dropped since January after the July dip. But it still remains far from 75.6, the level it fell to in April 2020 at the peak of the first wave of the pandemic.