German business<\/span> confidence weakened unexpectedly in July as supply bottlenecks and concerns over rising coronavirus infections weighed on the economy, survey results from the ifo Institute revealed on Monday.<\/p>\n
The business climate index fell to 100.8 in July from a revised 101.7 in June. The score was forecast to rise to 102.1 from June’s initially estimated value of 101.8.<\/p>\n
Assessment of companies regarding their current business situations improved in July, while their expectations for the coming months were significantly less optimistic.<\/p>\n
The current conditions index rose to 100.4 from a revised 99.7 a month ago. But it was below the economists’ forecast of 101.6.<\/p>\n
Meanwhile, the business expectations index dropped more-than-expected to 101.2 in July from 103.7 in the prior month. The expected reading was 103.3. <\/p>\n
Driven by weak expectations, business climate deteriorated in the manufacturing sector. In contrast, companies’ assessments of the current situation rose to their highest level since August 2018.<\/p>\n
The scarcity of intermediate products is becoming more critical, and more and more companies complain of a lack of skilled workers, the survey showed. <\/p>\n
In the service sector, the business climate weakened in July. Although service providers were more satisfied with their ongoing business, their view of the coming months is much less optimistic. <\/p>\n
The business climate index in trade took a downturn in July, while in construction, the business climate improved. <\/p>\n
The small decline in the Business Climate Index in July suggests that the rebound in Germany may be losing some momentum, Andrew Kenningham, an economist at Capital Economics, said.<\/p>\n
But Germany will still post very rapid GDP growth in both the second quarter and third quarter and should regain its pre-pandemic level ahead of any other major euro-zone country, the economist added. <\/p>\n
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