German business morale dips for sixth consecutive month

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FILE PHOTO: A commuter train passes by the skyline of the financial district in Frankfurt

BERLIN -German business morale declined for a sixth straight month as Europe’s largest economy feels the effects of supply bottlenecks and COVID-19 restrictions, a survey showed on Friday.

The Ifo institute said its business climate index fell to 94.7 in December from a revised 96.6 in November. A Reuters poll of analysts had pointed to a reading of 95.3.

“The German economy isn’t getting any presents this year,” said Ifo President Clemens Fuest.

In the manufacturing sector, the index rose in December, after falling five consecutive times, due to more optimism in the sector as order books grew substantially. However, companies’ assessments of the situation were somewhat worse.

A report by Germany’s chemical association VCI on Thursday said that 35% of companies said they had to curtail production due to supply issues and 10% had to temporarily shut down.

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Fuest said that pessimism regarding the first half of 2022 also increased.

The mood was somewhat reflected by Germany’s central bank, which said the economy would experience a setback in the final quarter of 2021 and the first quarter of 2022, but is set to pick up momentum again next spring.

A purchasing manager survey on Thursday on the other hand saw business expectations brightened, buoyed by hopes that supply-chain problems and pandemic-related curbs on activity could fade over the coming year.

(Reporting by Miranda Murray, editing by Thomas Escritt and Giles Elgood)