Confidence among business leaders in Germany inched back slightly in January, a closely-watched survey showed Monday, as expectations for the coming months clouded over.
A monthly barometer from the Munich-based Ifo institute fell 0.4 points compared with December, to 95.9, well short of a consensus forecast from analysts surveyed by Factset. “The German economy is starting the year in a cautious mood,” Ifo chief Clemens Fuest said in a statement.
Of the two main components of the barometer, businesses’ expectations for the coming months fell back one whole point, to 92.9, while views of the present economic situation improved 0.3 points, to 99.1.
Among different economic sectors, “manufacturing is showing signs of recovery,” Fuest said.
Producer firms have benefited from some clearing-up of uncertainty in recent weeks, as the US and China struck a trade truce and the next steps for Brexit became clearer.
Both manufacturers’ judgements of the present situation and the future outlook improved. Meanwhile service firms’ confidence fell back “noticeably”, as falling expectations overpowered greater satisfaction with present business.
The overall slip in confidence was “a hefty surprise,” said economist Uwe Burkert of LBBW bank.
“Apparently weakness in industry has reached services firms with a time delay.” With “a difficult year ahead”, “we can but hope that the industrial recovery we can now see in the data arrives,” Burkert said.