Germany's Business Climate Index Drops to 87.6 in December

(MENAFN) Economic sentiment in Germany has deteriorated further, with a key confidence gauge dropping below expectations as companies express mounting concerns about the months ahead.

Ifo Institute for Economic Research released Wednesday findings from its December Business Climate Index survey, which gathered responses from roughly 9,000 enterprises across the nation.

The Business Climate Index for industry and trade declined to 87.6 points this month, down from a revised November reading of 88 points. Analysts had anticipated the measure would climb to 88.2 points instead.

Meanwhile, Germany's Ifo Expectations Index slipped from 90.5 to 89.7 points, while the Current Situation Index held steady at 85.6.

The institute observed that firms are growing increasingly negative in their outlook for the first half of 2026, though their evaluation of present conditions showed no change. Ifo emphasized that the year is concluding without any sense of optimism.

Manufacturing confidence has weakened considerably, with incoming orders declining and businesses preparing to reduce output, the survey revealed.

"In the service sector, the business climate has fallen back into negative territory. Service providers were less satisfied with current business and reported lower expectations," the institute noted.

Ifo further reported that trading conditions worsened, with merchants expressing disappointment over holiday season performance. The construction sector's business climate stayed flat at depressed levels.

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