German business confidence ebbs further in June

Frankfurt am Main (AFP) –


Confidence among German business leaders fell slightly in June, a regular survey showed Monday, continuing a months-long trend analysts blame largely on global trade uncertainty.

The Munich-based Ifo institute's monthly barometer fell 0.5 points, to 97.4, in line with forecasts from analysts surveyed by Factset and its lowest level since November 2014.

"Companies are looking at the coming months with growing pessimism. On the other hand, they judge their present situation minimally improved," Ifo chief Clemens Fuest said in a statement.

"Germany's economic situation is stagnating further."

Looking to different areas of the economy, manufacturing firms reported the lowest confidence levels.

German producers have suffered from trade conflicts launched by Washington against China and the European Union, as well as other sources of uncertainty dogging international business.

The mood among services firms also fell but remained more positive, cushioned by a strong domestic economy and low unemployment levels.

In June, "the list of global negative risks has become even longer," noted economist Klaus Borger of public development bank KfW.

He highlighted tensions between the US and Iran and President Donald Trump's threats to slap tariffs on Mexico if it did not stop migrants reaching the American border -- "using punitive tariffs as a means of exerting pressure beyond trade policy."

Furthermore, former foreign minister Boris Johnson appears set to become the next British prime minister.

The bombastic Conservative has promised to quit the European Union on October 31, with or without a deal to cushion the impact on the massive trade flows between Britain and the Continent.

"It is the never-ending external risks and uncertainties, mainly related to the trade conflict but also Brexit, which are spoiling the party" for German business, agreed ING bank economist Carsten Brzeski.

However, "despite the sharp slowdown in confidence indicators, economic growth has actually been holding up quite well," he added.