German business confidence deteriorated more-than-expected to a 13-month low in April on trade tensions, survey data from the Munich-based Ifo Institute showed Tuesday.
The business sentiment index fell to 102.1 from 103.3 a month ago. This was the lowest reading since March 2017, when the reading was 101.3. The score was forecast to drop moderately to 102.8.
The indicator for the current business situation as well as expectations deteriorated in April. The German economy is slowing down, Ifo President Clemens Fuest said.
The current situation index came in at a 10-month low of 105.7, down from 106.6 in March. The expected score was 106.5.
Likewise, the expectations index fell to 98.7 in April from 100 in the previous month. The reading was seen at 99.5. The score was the lowest since April 2016.
The business climate weakened across all sectors except construction, where it hit a record high. In manufacturing, business climate deteriorated for the third straight month.
In the service sector, business sentiment weakened due to far less optimistic business expectations. The business climate indicator fell in wholesale and retail trade.
April’s disappointing Ifo survey added to signs that the German economy is slowing, but not as sharply as recent hard data imply, Jennifer McKeown, an economist at Capital Economics, said.
This is further cause for caution ahead of the European Central Bank’s meeting this Thursday. The economist doubt that the bank will alter its dovish forward guidance, for now.
Carsten Brzeski, an economist at ING-DiBa said, even though last year’s strong positive momentum has ebbed away somewhat, the German economy should not be on the eve of a structural downswing, neither is the Eurozone economy.
While some additional short-term disappointments cannot be excluded, the summer months should make up for them, Brzeski added.