German Business climate has clouded over again

Germany’s business climate continues to deteriorate, says ifo in its monthly report. For the second month in a row, the general index and the expectations component fell. At the same time, the assessment of current conditions continues to improve.

Supply bottlenecks for intermediate products in manufacturing and worries about rising infection numbers strain the economy.

Alarmingly, manufacturing companies are reporting a drop in demand, which is worsening sentiment estimates. This could be a result of slowing growth in China, but markets are also worried that Europe is facing anaemic growth after an initially swift recovery.

If the latter is true, this is not good news for the euro, as it risks significantly delaying policy normalisation by keeping rates much longer than most other countries’ counterparts.

The FxPro Analyst Team