Germany business sentiment weakened unexpectedly in December, from a record high, on less optimistic business expectations, survey data from the Ifo Institute showed Tuesday.
The business sentiment index fell to 117.2 in December from revised 117.6 a month ago, according to a monthly survey conducted among 7,000 firms by the Munich-based institute.
Economists had forecast the indicator to rise to 117.6 from November's original estimate of 117.5.
Sentiment among German businesses is excellent ahead of Christmas, but no longer quite as euphoric as last month, Clemens Fuest, Ifo President said. "German businesses are full of festive spirits."
Assessments of current business situation were more positive, while business expectations weakened from November.
The current conditions indicator rose to 125.4 in December from 124.5 in November. Meanwhile, the expectations index came in at 109.5, which was below the forecast of 110.8 and November's 111.0.
Jörg Krämer, Commerzbank chief economist said the trend of the Ifo business climate is still clearly pointing upwards.
Secondly, the European Central Bank is a long way from cooling economic activity by means of higher key rates and thirdly, the upswing in the rest of the euro zone is still young, the economist noted.
In manufacturing, business climate dropped from its record high as manufacturers were no longer quite as optimistic about the months ahead. However, due to an upturn in orders, they were more positive about their current situation.
In wholesaling, business climate deteriorated slightly in December. Wholesalers were less satisfied with their current business situation and their outlook. On the other hand, retailers reported excellent Christmas business, but fewer firms expect it to improve further.
In construction, business climate improved on upwardly revised assessment of the current business situation and their expectations.
by RTT Staff Writer
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