German business confidence deteriorated for the fourth month in a row in October, data showed on Friday, as Europe's economic powerhouse begins to feel the pain of the region's debt crisis. The monthly Ifo business climate index fell by one full point to 106.4 points in October, its lowest level in just over a year.
The decline may not have been quite as steep as expected - economists had been pencilling in a drop to 106.3 or 106.2 points - but the data showed that the eurozone's debt crisis is making companies perceptibly nervous about the future, analysts said. Ifo chief chief Hans-Werner Sinn said the business climate in Germany "cooled further in October."
While survey participants assessed their current business situation "predominantly as favourable, they do not regard it quite as positively as they did in September," Sinn said. And business expectations for the next six months "are noticeably more pessimistic than previously," he said.
Nevertheless, "given the international turmoil, the German economy is still performing well" overall, he insisted. A sub-index that measures company assessments of their current situation fell to 116.7 points from 117.9 points in September and expectations for the six months to come dropped to 97.0 points from 97.9 points, hitting its lowest level since July 2009. Storm clouds have been gathering over Europe's biggest economy for a while now.
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