German business morale fell in March, for the first time in five months.
The Ifo economic think tank’s monthly survey of some 7,000 companies reflected concerns about a possible resurgence of the eurozone debt crisis with negative effects for Europe’s largest economy.
Italy’s inconclusive election was one factor, Ifo said, along with Cyprus’s bailout problems, though 85 percent of the survey responses came in before the latest developments in Cyprus.
Ifo said expectations for exports, traditionally the backbone of German growth, had clearly sunk but remained positive.
David Brown of New View Economics said the survey suggested “the bells are starting to toll in Germany that the eurozone crisis is about to hit recovery prospects again.
“The biggest risk right now is that euro contagion is once again uncaged and ready to rip through the heart of economic confidence,” he said.
The Ifo data, which followed on from a modest purchasing managers survey on Thursday that showed Germany’s business expansion lost steam in March, sent the euro to a two-week low against the yen.
But most economists still expect Germany to avoid recession and regain economic momentum as 2013 progresses.