German business confidence unexpectedly tears off

By Tuba Ongun

Germany's business climate index surprisingly declined to a three-month low in June, according to data from a Munich-based research institute on Monday.

The Ifo Business Climate Index decreased to 88.6 points from 89.3 in May, while the market expected an increase in the June figure.

The downturn was due to more pessimistic expectations, said Clemens Fuest, the head of the Ifo Institute for Economic Research.

The Ifo Business Expectations Index dropped to 89 this month, down from May's 90.3.

"However, the assessments of the current situation remained unchanged. The German economy is having difficulty overcoming stagnation," Fuest noted.

By industry, sentiment deteriorated to minus 9.2 in June, shifting from three months of rise.

Meanwhile, in the service sector, the business climate improved to 4.2, thanks to a positive sentiment in the hotel sector.

In trade, the business climate worsened significantly with the sub-index going down to minus 23.5 this month, while it rose slightly in construction to minus 25.