German business sentiment remained unchanged in October as the weakening in current assessment was offset by the marginal improvement in expectations, survey data from Ifo Institute showed Friday.
The business climate index held steady at 94.6 in October. The reading was expected to drop to 94.5.
The index for current assessment declined to 97.8 from 98.6 in September. The score was forecast to fall to 98.0.
Meanwhile, the expectations indicator improved for the first time in seven months in October. The index hit a 3-month high of 91.5 versus 90.9 a month ago. This was above the forecast of 91.0.
ifo President Clemens Fuest said the German economy is stabilizing.
In its monthly report released earlier this week, Bundesbank said the economy might have entered a technical recession in the third quarter. However, the bank does not expect a deep recession.
Today’s data reaffirm that the German economy will continue to shrink well into 2020, particularly given the limited fiscal stimulus announced by the government last week, Melanie Debono, an economist at Capital Economics, said.
The International Monetary Fund forecast the largest euro area economy to grow 0.5 percent this year.
In manufacturing, business climate strengthened noticeably, putting an end to the downward trend in October, the ifo survey showed.
Capacity utilization dropped to 82.6 percent. The score has moved below its long-term average of 83.7 for the first time since 2013.
Business climate in services was unchanged as service providers were less satisfied with their current situation, while their expectations brightened.
The business climate in trade has improved, thanks to considerably higher expectations in wholesale. In construction, business climate dropped as both current situation and expectations weakened from September.
A survey data released earlier today showed that the German consumer confidence is set to weaken to a three-year low in November.
According to GfK, the forward-looking consumer sentiment index fell to 9.6 in November from a revised 9.8 in October. The expected score was 9.8.
Besides global economic downturn, trade conflicts and Brexit chaos, job losses especially in the automobile industry and financial market weighed on sentiment.
The material has been provided by InstaForex Company – www.instaforex.com