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Business climate blues

October 24, 2012

The eurozone crisis is finally hitting Germany which has long fared better than its neighbors. But a closely-watched think tank barometer indicates that the mood among entrepreneurs keeps getting worse.

https://p.dw.com/p/16VTM
Engine check at German machine tools plant
Image: picture-alliance/dpa

Business confidence in Europe's economic powerhouse keeps declining further, Germany's most important economic barometer showed on Wednesday.

The business climate index is compiled by the Munich-based Ifo institute. It dropped to 100 points in October from 101.4 points in the previous month, disappointing analysts who'd penciled in a slight rise.

The Ifo index fell for the sixth time in succession. "Companies again expressed growing dissatisfaction with their current business situation," Ifo Chief Hans-Werner Sinn said in a statement. "The clouds over the German economy are darkening."

Motor still humming

Sinn said most of the 7,000 companies polled did not run on full capacity at present, with the situation particularly alarming in the retail and construction sectors.

Ifo's sub-index gauging current assessments of the business environment fell to 107.3 points in October, its lowest level since June 2010, while the outlook sub-index remained unchanged at 93.2 percent.

The German economy posted 0.3-percent growth in the second quarter, while the whole of the eurozone contracted by 0.2 percent. But the country's central bank warned earlier this week that Germany might move towards stagnation or even contraction in the final quarter of 2012.

hg/rg (dpa, AFP)