German business confidence slips in February

German business confidence has dropped off a little above expectations. But Europe’s biggest economy was still set for solid growth in the first quarter of the year, analysts from the ifo research institute insisted.

Engine tester (picture-alliance/dpa/J. Büttner)

German business confidence fell a little more than had been expected in February, the Munich-based ifo economic institute said on Thursday, adding that it still remained at a high level.

The think tank said its business climate index, based on a monthly survey of 7,000 firms, fell to 115.4 from 117.6 in January.

The February reading was above expectations in a Reuters consensus forecast of analysts who predicted a fall to 117.0.

“Companies were less satisfied with their current business situation, but the indicator still was at its second-highest level since 1991,” ifo chief Clemens Fuest said, adding that this signaled economic growth of 0.7 percent in the first quarter.

“The German economy has put its foot down on the euphoria brake,” Fuest added.

In manufacturing, the index noted a deep fall from last month’s record high.

Germany's export euphoria is flattening, in part due to a strong euro ( Imago/Ralph Peters)Germany’s export euphoria is flattening, in part due to a strong euro

Manufacturers reported a marginal slowdown in demand and slightly lower order levels, ifo said.

“In industry, export euphoria is flattening somewhat. That is also due to the strong euro,” ifo economic expert Klaus Wohlrabe told the news agency Reuters, adding that uncertainty over ongoing coalition talks to form a new government had also not helped.

The business climate also deteriorated in both wholesaling and retailing. Firms scaled back their assessments of both the current business situation and expectations.

The index also fell in construction, due to a far lower expectation indicator, although assessments of the current business situation hit a new record high.

jbh/hg (Reuters,dpa)