The Ifo institute said its economic sentiment index fell to 88.6 in June from 89.3 in May. Analysts had expected a reading of 89.7.
 "German business sentiment unexpectedly worsens in June: Ifo institute")
The German economy is struggling to emerge from stagnation. (Image: Shutter Stock) Reuters Berlin
German business morale unexpectedly fell in June amid growing pessimism about the performance of Europe's largest economy, a survey of nearly 9,000 managers showed on Monday.
The Ifo economic institute said its business confidence index fell to 88.6 in June from 89.3 in May, below the 89.7 forecast by analysts in a Reuters poll.
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“The German economy is struggling to overcome stagnation,” Ifo Chairman Clemens Fuest said.
The expectations index fell to 89.0 in June, down from a slightly revised 90.3 in the previous month. Analysts had expected the index to rise to 91.0.
“The numbers are as bad as they look,” said Jens-Oliver-Niklasz, an economist at LBBW Bank, as they have worsened from an already low base, in contrast to the recent trend of forecasts trending upwards.
“It is unclear at this point where the expected surge in growth in 2025 will come from,” Nicklas added.
Not enough momentum?
Ifo last week slightly raised its economic growth forecast for 2024 to 0.4 percent and predicted that the German economy, which last year was the weakest of the major euro zone countries, would recover this year and reach 1.5 percent growth in 2025.
“Optimism has given way to realism at the start of the year,” said Carsten Brzeski, an analyst at ING, adding that the latest purchasing managers' index and IFO data showed the German economy was still struggling to regain momentum.
HCOB Flash PMI for Manufacturing
Gross domestic product (GDP) unexpectedly fell further in June as all indicators suggested demand for industrial products, which account for about a fifth of the economy, was failing to pick up.
Manufacturing companies surveyed by Ifo expressed skepticism about the coming months, and Fuest said companies were particularly worried about falling order backlogs, but were somewhat satisfied with current business.
The Ifo index, which measures current business conditions, stagnated at 88.3 in June, below analysts' expectations of a small increase.
