Germany's Economic Confidence Index Fell Short of Expectations in September

Losses in German Business Confidence

The Munich-based Institute for Economic Research (Ifo) has published the September results of its German Business Survey, which surveyed nearly 9,000 companies.

The data show that the Ifo Business Confidence Index fell to 87.7 points in September, down from the previous month's reading of 88.9 points. This marks the end of a six-month upward trend.

Market analysts had expected the index to rise to 89.4 points.

In September, the Ifo Expectations Index fell from 91.4 to 89.7 points, while the Current Situation Index declined from 86.4 to 85.7 points.

Worsening in the Manufacturing Sector

The survey results reveal that the current situation and expectations for the future in the manufacturing sector have deteriorated and new orders have declined again.

Economy Remains Fragile

Ifo President Clemens Fuest said in his assessment that companies are less satisfied with their current business and that expectations have deteriorated markedly.

Alexander Krüger, Chief Economist at Hauck Aufhauser Lampe Privatbank, said that the current economic environment is similar to the conditions of the 2008 global financial crisis and the pandemic period. But it is unclear where this change will come from."

German Economic Weakness

The German economy contracted by 0.1 percent in the second quarter, after growing by 0.3 percent in the first quarter. Persistent weakness in the manufacturing sector, which is particularly strong compared to European countries, remains a drag on growth.

Rising interest rates, cyclical risks and structural transformations continue to threaten growth.