German business confidence deteriorates a little in March - Ifo
By Michele Maatouk
Date: Thursday 22 Mar 2018
(ShareCast News) - German business confidence deteriorated a little in March, according to a widely-followed survey released on Thursday.
The Ifo business climate index fell to 114.7 from 115.4 in February, just missing expectations for a reading of 114.8.
Meanwhile, the current assessment index dropped to 125.9 from 126.3 the month before, coming in slightly ahead of expectations for a reading of 125.7.
The expectations index slipped to 104.4 in March from 105.4 the month before, bang in line with forecasts.
The index for manufacturing fell to 26.5 from 28.1 in February, while the index for construction rose to 17.9 from 15.9 and the wholesaling gauge was steady at 20.7. The index for retailing slumped to 4.7 this month from 11.1 in February.
Clemens Fuest, president of the Ifo Institute, said the threat of protectionism is dampening the mood in the German economy.
Berenberg economist Florian Hense said: "Few major advanced economies rely on international trade as much as Germany's. Thus, trade tensions and fears of a protectionist wave that have surfaced over the last couple of weeks were set to leave a mark on business confidence in the eurozone's biggest economy.
"That a new government was formed in Germany, reducing political uncertainty, could not offset the headwinds from the threat of trade wars. For the time being we probably do not need to worry about the only small correction in confidence. Sentiment had reached multi-decade highs at the turn of the year before falling off a bit recently. The fall in the soft data brings it in line with the hard data and the current level suggests a healthy pace of expansion in 2018."
Hense added that the risk of a trade war has increased, but remains low. "For now, the tariffs announced by the US administration do not pose an immediate economic threat to the global economy. They remain very limited in size and scope."
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said that while the expectations index dropped, it's not yet at a level where alarm bells start ringing.
"Anything below 100, however, would be a bad sign," he said.
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