BERLIN (Reuters) – Germany’s business climate deteriorated in July for the third consecutive month, the Ifo economics monthly survey showed on Tuesday, suggesting that the recovery of Europe’s largest economy from the onset of recession may take longer than expected.
The Ifo business climate index fell from 88.6 in June to 87.3 in July as economists and analysts polled by Reuters on average expected a limited slowdown to 88.0.
The component of the judgment of business leaders on their current business conditions stood at 91.3 after 93.7 last month and that measuring the evolution of their expectations came out at 83.5, against 83.8 in June.
The consensus was 93.0 and 83.4 respectively.
Germany entered a technical recession at the beginning of the year, which is defined by two consecutive quarters of contraction. The country will release its preliminary gross domestic product (GDP) data for the second quarter on Friday.
“The German economy hasn’t really recovered since the COVID-19 crisis,” said Thomas Gitzel, chief economist at VP Bank.
“The problem is that cyclical variations do not lead to high GDP growth rates, but rather to fragile growth,” he added.
Several other indicators paint a gloomy outlook for Germany, where sluggish growth is weighing on the entire euro zone.
The S&P Global composite PMI index, which includes both the manufacturing and services sectors, fell in July, for the first time since January, below the 50 mark separating growth and contraction of activity. This reinforces the hypothesis of a longer recession.
(Report Rachel More and Miranda Murray; Claude Chendjou, editing by Kate Entringer)
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