2018.10.2507:44:00UTC+00German Business Sentiment Deteriorates For Second Month

Germany's business sentiment weakened for the second straight month in October on geopolitical tensions, survey data from the Mannheim-based Ifo institute showed Thursday.

The business climate index fell more-than-expected to 102.8 in October from 103.7 in September. The expected score was 103.2.

Firms were less satisfied with their current business situation and less optimistic about the months ahead. Growing global uncertainty is increasingly taking its toll on the German economy, Ifo President Clemens Fuest, said.

Today's Ifo index is a perfect illustration of the current dichotomy between increasing fears about the future and solid growth at present, Carsten Brzeski, an ING DiBa economist said.

The high current assessment component points to continued strong growth at the start of the final quarter of the year, while weaker expectations perfectly illustrate increased worries, Brzeski added.

The current conditions index came in at 105.9 in October versus 106.6 a month ago and the forecast of 106.0.

At the same time, the expectations index dropped to 99.8 from 100.9 in the previous month. Economists had forecast the indicator to decline to 100.4.

The survey showed that business climate in manufacturing fell significantly due to markedly less optimistic business expectations. Assessments of the current business situation fell to their lowest level since March 2017. In the services sector, the business climate deteriorated due to far less favorable assessments of the current business situation. Meanwhile, business expectations were upwardly revised somewhat.

Traders scaled back their assessments of both the current business situation and their expectations. The business climate index declined far more sharply in retailing than in wholesaling.

In construction, the business climate index hit another record high, survey showed. Assessments of the current business situation were far better. On the other hand, business expectations were scaled back slightly.