Mood sags in German business

Ifo's business confidence index dropped to 104.4 points in April from 106.7 points in March, the German economic research institute said Wednesday.

The monthly decline of the closely-watched economic indicator was the second in a row, and was sharper than expected by analysts who had been forecasting only a slight drop to 106.2 points.

"The German economy has taken a breather," Ifo Chief Economist Kai Carstensen said, as he released the survey which is based on the opinions of about 7,000 German business leaders. 

The Ifo research group calculates its headline index on the basis of companies' assessments of their current business performance and their prospects for the next few months.

In April, current business perceptions slipped only marginally to 107.2 points from 109.9 points in March. But the outlook sub-index fell by two whole points.

"Although the majority of companies assessed their current business situation as good, they were far more cautious than last month," Carstensen said.

Ifo's barometer started to slip in March after rising continuously since November last year. Economists argue, however, that only a third consecutive monthly decline in business sentiment would herald the beginning of a downward trend in the German economy.

uhe/ipj (dpa, AFP)