2017.09.2603:57:00UTC+00German Business Morale Falls as Economy Nears Peak Expansion

German business morale suddenly weakened for a second month in September, in an indication that the economy is finding it difficult to improve on its current rapid pace of growth.

The Institute for Economic Research (Ifo's) overall business climate index dropped to 115.2 in September from 115.9 in August, FactSet data revealed. It fell short of the consensus estimate of 116.

The Bundesbank recently said that third-quarter growth momentum will be “slightly” lower compared with the first half.

Businesses in the eurozone's largest economy have remained upbeat due to the strong expansion across the currency bloc and at large trading partners.

German businesses have been boosted by years of tailwinds from a relatively weak euro and ultra-cheap borrowing costs, supported by job creation that has reduced unemployment to a record low and raised household spending.

It is currently facing uncertainties as the economy expands near capacity, a firming euro threatens to add further pressure on exports, while European Central Bank talks on slowing eurozone stimulus have raised bond yields.

Ifo's measure of current economic conditions also worsened to 123.6 from a revised 124.7 and a gauge of expectations dropped to 107.4 from a revised 107.8.