German Business Outlook Unexpectedly Slips, Clouding Rebound

Forex

Economic

Summary:

German business confidence unexpectedly dipped in November, a fresh sign of the challenge to overcome stagnation even as the government ramps up spending.

An expectations index by the Ifo institute dropped to 90.6 in November from 91.6 the previous month, a release Monday showed. Analysts in a Bloomberg survey had predicted an unchanged reading. A measure of existing conditions edged higher.

"Companies assessed their current situation as somewhat more positive," Ifo President Clemens Fuest said. "They have little faith that a recovery is coming anytime soon," however, with the outlook among manufacturers taking a "significant hit."

The data underscore doubts about the government's plan to restore growth by investing in infrastructure and defense. While the Bundesbank and most other forecasters expect output to expand in the fourth quarter after a volatile 2025, some have recently scaled back their predictions.

Chancellor Friedrich Merz's economic advisers this month lowered their growth forecast for next year to less than 1%, while warning that the government must ensure outlays are targeted at additional and productive investments. Otherwise, the chance to address deep-seated challenges and restore longer-term growth could be squandered, they said.

Business surveys by S&P Global released last week showed business activity continued to grow in November, but at a slower pace than in the previous month. Manufacturing suffered a particular setback as new orders fell sharply.

The European Commission still said last week that it expects Germany to end its long period of stagnation next year. While US tariffs and global uncertainty will continue to pressure exporters, the economy should benefit from higher investments and private consumption next year, it said.

Source: Bloomberg Europe

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German Business Outlook Unexpectedly Slips, Clouding Rebound

Source: Bloomberg Europe

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