German Business Confidence Hits 18 Month Low

Companies surveyed are less satisfied with their current business situation and expressed greater pessimism about the future.

The eurozone crisis is increasingly hitting the German economy, the leader in Europe, data suggested on Monday as German business confidence fell for the fifth month in a row to the lowest level since February 2010.

The Ifo economic institute's closely watched business climate index dropped to 101.4 points in September from 102.3 points in August, disappointing analysts surveyed by Dow Jones Newswires who had expected an unchanged reading.

"The companies surveyed are again less satisfied with their current business situation. They also expressed greater pessimism about the future," said Ifo president Hans-Werner Sinn.

"The headwinds on the German economy continue to prevail," he added.

Ifo calculates its headline index on the basis of companies' assessments of their current business and the outlook for the next six months.

The sub-index measuring current business dropped to 110.3 in September from 111.1 points in August, and the outlook sub-index also fell to 93.2 points from 94.2 points in August.

Unlike many of its neighbors, Germany has shown strong resistance to the debt crisis that has swept through the 17-country bloc, relying on its powerful export motor to keep the economy humming.  It notched up modest growth of 0.3% in the second quarter while the eurozone as a whole contracted by 0.2%.

But even the German powerhouse has been unable to resist forever and a raft of economic data recently has suggested the economy is beginning to falter.

Copyright Agence France-Presse, 2012

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