German Business Sentiment Falls Unexpectedly

MUNICH (Thomson Financial) - The Ifo research institute said its July business climate index fell to 97.5 from 101.2 in June, dropping below analysts' forecasts of a decline to 100.0, and suggesting "the economic upswing is coming to an end", Ifo president Hans-Werner Sinn said in a statement.

The figure for June was revised down from 101.3.

The July business assessment index, which measures current conditions, eased to 105.7 from 108.3 in June. The forecast was for a decline to 106.0.

The business expectations index, which measures expectations for the next six months, slumped to 90.0 from 94.7 in June. A decline to 92.5 was the consensus.

"The firms are much more dissatisfied with their current business situation and they are clearly more reserved regarding the six-month outlook," Sinn said.

He added that in manufacturing, the business climate indicator had "fallen noticeably", with manufacturers expecting export business will no longer expand "so rapidly".

In the other three survey sectors -- construction, retailing and wholesaling -- the business climate index is "clearly trending downwards", Sinn said.

He said that in wholesaling and retailing -- the two trade sectors -- the business climate index has fallen "significantly".

Trading firms have assessed both their current business situation as well as the six-month outlook "clearly more pessimistically" than in June, Sinn added. cs1/kf1/cs1/rfw COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved.

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