German Ifo Business Sentiment At 7-Month Low

(RTTNews) - German business confidence deteriorated to a seven-month low in December as companies were more pessimistic about the first half of next year, survey data from the Munich-based ifo Institute showed on Wednesday.

The business climate index dropped to 87.6 in December from 88.0 in November. The score was expected to rise to 88.2.

Companies were more pessimistic about the first half of 2026, while their assessment of the current situation remained unchanged in December.

The year is ending without any sense of optimism, ifo President Clemens Fuest said. The current situation index held steady at 85.6 in December, while the reading was forecast to rise slightly to 85.7.

On the other hand, the expectations index dropped to 89.7 from 90.5 in the prior month. Economists were expecting the index to remain stable at 90.5.

ING economist Carsten Brzeski commented that the ifo survey results fits into the base case scenario that the German economy will end the year with yet another growthless quarter.

There is sufficient evidence to suggest that the largest euro area economy will leave stagnation behind next year, even though any cyclical rebound should definitely not be mistaken for a structural improvement, the economist added.

The business confidence index in the manufacturing sector weakened in December. The development was driven by more pessimistic expectations. Assessments of the current situation were slightly better but stayed at a low level.

In the service sector, confidence fell back into negative territory. Service providers were less satisfied with their current business and reported lower expectations.

Confidence in trade also weakened at the end of the year. Assessments of the current situation were revised downward. The outlook for the first half of the next year was also gloomy. Retailers were dissatisfied with Christmas sales, the survey showed.

In construction, the business climate remained unchanged at a low level in December. Companies assessed the current situation as worse and they were less skeptical about the coming months.