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New survey by German think tank Ifo shows country's business morale deteriorated in May

New survey by German think tank Ifo shows country's business morale deteriorated in May
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Figures from a leading survey published on Friday showed business morale in Germany deteriorated slightly in what is often referred to as Europe’s economic powerhouse. The data though was above analysts forecasts.

The Munich-based Ifo think tank said its business climate index, based on a monthly survey of 7,000 firms edged down to 108.5 from 108.6 in April.

“The reason for the declining expectations – which are still very good – are especially the export expectations. They have declined a little, because the euro has appreciated slightly and the global economy is not booming as much as some might have expected. But overall the expectations remained at a very good level,” explained analyst Klaus Wohlrabe.

The figures come on the back of the country’s first quarter gross domestic product data – 0.3 percent – which was not only below the average for the eurozone which was 0.4 percent, it also trailed behind Spain and France. A purchasing managers’ survey earlier this week revealed private sector expansion slowing.

Sentiment in the manufacturing and wholesaling sectors weakened. The Ifo survey showed companies were more optimistic about the current situation that any any point in the last year but more pessimistic about future prospects. The think tank said it was sticking to its forecast for Germany’s growth for the second quarter predicting it should rise to 0.5 percent.

Data showed consumers have benefited from a robust labour market, rising wages and low inflation. The finance ministry said on Friday a favourable business environment should support the economic upswing for the remainder of this year.