2019.09.2407:32:00UTC+00German Ifo Business Confidence Improves Slightly In September

German business confidence improved slightly in September as the better assessment of the current situation offset the worst decline in expectations over a decade, survey results from the Munich-based ifo institute showed Tuesday.

The ifo business climate index rose more-than-expected to 94.6 from 94.3 in August. The expected reading was 94.5.

Although the current assessment improved, the outlook for the coming months deteriorated to the lowest in more than a decade.

"The downturn is taking a breather," Clemens Fuest, ifo President, said.

The small increase in the ifo index does not take away the fact that the German industry continues to suffer from structural changes and the ongoing trade conflict, Carsten Brzeski, an ING economics, said.

The prolonged weakness of the German economy, centred on its export-oriented manufacturing sector, will keep the pressure on the government in Berlin to heed European Central Bank Chief Mario Draghi's call for looser fiscal policy, Andrew Kenningham, an economist at Capital Economics, said.

In its monthly report released Monday, Bundesbank said Germany is likely to enter a technical recession in the third quarter, but it not a cause for concern.

The central bank said a mild recession should currently be seen as part of a cyclical return to normality as the German economy emerges from a period of overheating.

The economy contracted 0.1 percent in the second quarter. A technical recession is defined as two consecutive quarters of decline in economic output.

According to the ifo survey, the current situation indicator rose to 98.5 from 97.4 in the previous month. The score was forecast to drop to 97.0.

Meanwhile, the expectations index declined to 90.8 from 91.3 a month ago. This was the lowest score since June 2009. Economists had forecast the index to rise to 92.0.

The business climate index for manufacturing continued to trend downward, while the measure for services logged a marked recovery after the decline in the previous month.

Morale weakened further in the trade sector, while confidence improved in construction, led by more optimistic expectations.