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German business morale hits lowest in more than a year

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German business morale hits lowest in more than a year

German business morale hits lowest in more than a year
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By Joseph Nasr and Michael Nienaber

BERLIN (Reuters) - German business confidence ebbed in June to its lowest in more than a year, suggesting the mood among company executives in Europe's biggest economy is darkening as the world edges towards a full-blown trade war.

Activity in all four economic sectors measured by the Munich-based Ifo institute in Monday's survey - manufacturing, services, trade and construction - fell, adding to signs the economy is cooling after a boom last year.

Ifo said its business climate index fell to 101.8, the lowest level since May 2017. The reading was slightly stronger than predicted in a Reuters consensus forecast of 101.7.

"The tailwind enjoyed by the German economy is (easing)," Ifo chief Clemens Fuest said.

But economists ruled out a recession and predicted the economy would continue to grow, albeit at a slower pace than last year's 2.5 percent.

"The modest fall reaffirms our ...narrative of an economy slowing to a normal growth level," Uwe Burkert of LBBW bank wrote in a note. "This is however no downturn and certainly no recession."

Much of the German data published this year has pointed to a cooling economy.

Industrial activity and exports were weak in the first four months, and U.S. President Donald Trump is now threatening to impose hefty tariffs on car imports from Europe - a trade that Germany dominates - on top of unilateral duties on metals.

German business leaders are also worried that a parallel trade confrontation between Washington and Beijing could harm exporters that rely on the world's two largest economies for growth.

"The boom is over. The German economy is heading towards normalisation," Ifo economist Klaus Wohlrabe told Reuters.

"The discussion about a trade war, unleashed by Trump, is weighing on the mood. Uncertainty has increased slightly."

(Writing by Joseph Nasr; editing by John Stonestreet)

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