German business sentiment deteriorates in December - Ifo

(Sharecast News) - German business sentiment deteriorated in December, according to a survey released on Tuesday by the Ifo Institute. The business climate index fell to 84.7 from 85.6 in November, missing consensus expectations for it to remain unchanged and hitting the lowest level since May 2020.

The current assessment index ticked up to 85.1 in December from 84.3 the month before, while the expectations gauge slumped to 84.4 from 87.0.

Ifo Institute president Clemens Fuest said: "The weakness of the German economy has become chronic."

The manufacturing index declined to -24.8 in December from -22.0 in November while the service sector gauge fell to -5.6 from -3.5. The index for trade deteriorated to -29.5 from -26.6 and the gauge for the construction sector was -26.1, up from -29.0.

Jack Allen-Reynolds, deputy chief eurozone economist at Capital Economics, said: "The Ifo business climate index (BCI) remained deep in recessionary territory in December.

"While the survey has overstated the weakness in the economy this year, the outlook is quite poor and we think Germany's GDP will eke out only a small expansion in 2025."

Carsten Brzeski, global head of macro at ING, said: "With today's Ifo index, another disappointing year draws to a close. The second consecutive year of stagnation, the first time since the early 2000s, and finally a growing awareness that Germany is again the sick man of Europe. Well, at least the growth laggard of Europe.

"The country is stuck between cyclical and structural headwinds and is struggling to agree on a way out. The collapse of the government paired with a long series of negative news and announcements from iconic German corporates is just some of the fallout of this stagnation and the disagreement on the right policy prescription."