German business confidence dropped for the fourth month in a row in September, a key index shows today, as the biggest European economy braced for fallout from the international financial crisis.
The monthly business climate index calculated by Munich-based economic research institute Ifo fell to 92.9 points in September from 94.8 points in the previous month.
'The firms are considerably more dissatisfied with their current business situation than they were in August,' said Ifo president Hans-Werner Sinn. 'The downward trend in the Ifo business climate index is proceeding in large steps,' he added.
Ifo's data was released a day after a survey of business activity for the euro zone found it had slumped to its lowest level since just after the attacks on the US in 2001, fuelling fears of a recession.
A sub-index of the Ifo survey that measures the current situation in Germany fell to 99.8 points from 103.2 in August, while expectations for the coming six months dropped to 86.5 points from 87 points, the institute said.
The overall business climate cooled in Germany's key manufacturing sector, as well as in the retail and wholesale sectors, Ifo found.
It rose slightly among construction companies however, with those polled viewing the current situation and the six-month outlook 'somewhat more favourably'.
But German manufacturers, the backbone of the country's export-led economy, 'reported a considerably less favourable business situation, and more now anticipate a poorer business development over the coming six months,' Ifo said. Very few said they planned to hire more workers in the coming months.
Retailers were more pessimistic regarding the current situation, but less so when it came to the six-month outlook.
Earlier this month, German press reports said the government would slash its 2009 growth forecast to 0.5% from a previous estimate of 1.2%when it publishes its next outlook on October 16.
