(Bloomberg) — Germany’s business outlook is at its lowest level since February — highlighting the gloom that is once again engulfing Europe’s largest economy after an early-year rebound fizzled out.
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It fell to 86.8 in August from a revised 87 the previous month, beating the 85.8 seen by analysts in a Bloomberg survey. The barometer of current conditions has also dropped.
„The German economy is increasingly falling into crisis,” Ifo president Clemens Fuest said in a statement on Monday. He noted that expectations for both manufacturing and services have deteriorated.
Hopes that Germany will recover in 2024 from two years of near-zero growth have faded as an expected jump in consumer spending failed to materialize and the country’s industry continued to struggle.
Gross domestic product unexpectedly fell 0.1% in the second quarter, while S&P’s global purchasing managers’ index remained below the 50 level, separating expansion from contraction for a second straight month in August.
The sluggish mood was reflected in this month’s investor sentiment index by the ZEW Institute, which fell to its lowest level since January. The Bundesbank warned of continued weakness in manufacturing as „industrial firms navigate a tough competitive environment”.
Some help could come in the form of interest rate cuts from the European Central Bank. It first cut borrowing costs in June and has signaled another move is possible in September.
–With assistance from Christian Seidenburg, Joel Rinneby, and Jana Rando.
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