‘Stuck in depression mode’: German business morale little changed in October – Ifo

German business sentiment remained virtually unchanged in October, defying forecasts of a further decline on the back of improved business expectations, according to a survey released on Tuesday, even as analysts say all signs continue to point to a coming recession.

The Ifo institute said its business climate index fell to 84.3 from a revised reading of 84.4 in September. Analysts polled by Reuters had expected a decline to 83.3. The survey’s expectations index rose slightly to 75.6 from 75.3 the previous month, its first rise since May.

“Their expectations have improved, but they are still worried about the coming months. The German economy is facing a difficult winter,” said Ifo President Clemens Fuest. Analysts were equally gloomy despite the better-than-expected figure, which many attributed to measures announced by the German government to cap high energy prices.

“Today’s business sentiment reading does nothing to change the looming recession. In the coming months, further sluggishness is more likely than an increase,” said the bank’s Jens-Oliver Niklasch. LBBW. As Alexander Krueger, chief economist of the private bank Hauck Aufhaeuser Lampe summed it up: “Companies remain stuck in depression mode, the energy crisis is stifling economic life”.

The Ifo survey of around 9,000 managers echoes the results of the ZEW economic institute’s survey last week which found that German investor sentiment was less pessimistic than expected, also due to the brakes on the advertised prices for gas and electricity. The German government expects Europe’s biggest economy to slide into recession next year as an energy crisis, rising prices and supply bottlenecks take their toll.

Ahead of the statistics office’s release on Friday, experts polled by Reuters expect German economic output in the third quarter to decline 0.2% from the previous quarter. The Ifo predicts that Germany will contract by 0.6% in the fourth quarter.

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