Bleak Outlook for German Economy

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The business sentiment in Germany took a hit in July, declining for the third consecutive month. The latest data from the Ifo Institute reveals that the country’s crucial manufacturing sector is reflecting a more pessimistic economic outlook.

The Ifo business-climate index dropped to 87.3 in July, down from 88.6 in June. Economists had predicted a reading of 88.1, making the actual figures worse than expected.

Clemens Fuest, president of the Ifo Institute, expressed concern over the state of the German economy, stating that the situation is becoming increasingly bleak. He highlighted that companies are far less satisfied with their current business performance, as the indicator for current conditions plunged from 93.7 in June to 91.3 in July.

The expectations for the next six months also saw a slight decrease, with the index falling to 83.5 in July from 83.8 in June.

The manufacturing sector experienced a particularly gloomy outlook, as companies reported a decline in new orders. Furthermore, capacity utilization dropped below its long-term average for the first time in over two years, according to Ifo.

Other sectors tracked by Ifo, including services, trade, and construction, also showed weaker results. Construction especially saw its lowest level since February 2010.

Overall, the outlook for the German economy appears challenging, raising concerns about future growth and stability.

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