FRANKFURT, MarketWatch (25/10) --German business sentiment unexpectedly
deteriorated in October as sales expectations slipped in most sectors,
including manufacturing, indicating that the economy is only gradually
regaining its strength. The Ifo institute's business confidence
index dropped for the first time in six months, to 107.4 in October from
107.7 in September, and fell short of economists' forecasts for an
increase to 108.0. But overall business sentiment remains robust and the economic recovery intact, economists say.The
euro has risen 8% against the U.S. dollar since July, to a two-year
high just above $1.38 this week, threatening to undermine German
exports. Ifo said that the roughly 7,000 companies participating
its monthly poll reported a slightly worse business outlook. The
business expectations indicator dropped to 103.6 in October from 104.2
in September. Companies also assessed the current business
situation less favorably. The corresponding Ifo indicator slipped to
111.3 from 111.4 in September. The unexpectedly weak Ifo results
follow a sharp increase in the ZEW index measuring economic sentiment
among German analysts and institutional investors, which hit its highest
level since April 2010 this month. A monthly survey of purchasing
managers by data firm Markit, however, indicated Thursday that private
sector activity in Germany is unlikely to pick up strongly over the
coming months. Economists forecast that the German economy grew
less in the third quarter than in the second quarter, but that
expansion will pick up again toward the end of the year. The federal
statistics office is due to publish a preliminary estimate of gross
domestic product on Nov. 14.The German government earlier this week forecast that the economy will expand 0.5% this year and 1.7% in 2014.
