Business confidence in Germany stagnated in May, the closely watched Ifo index showed today, disappointing expectations for a stronger performance in Europe's top economy.
The index edged down to 101.5 points from 101.6 in April, an Ifo spokesman said, but otherwise remained at its highest level since May 2008.
Analysts had expected a small rise to 102 points, however, and one said the euro zone debt crisis and financial market turmoil appeared to have taken their toll.
Ifo president Hans-Werner Sinn was cautious in his interpretation of the German data, saying that the business climate was nearly unchanged and that 'the economic recovery in Germany is robust'.
A breakdown of the survey showed that while the business climate had improved further in the critical manufacturing sector, it was markedly less favourable in the retail and construction sectors.
Although a bitterly cold winter held German growth to a modest 0.2% in the first quarter of 2010, the economy is projected to grow by 1.4% this year.
The country is slowly recovering from its worst recession in more than six decades, with the economy shrinking by 4.9% in 2009.
In March, industrial output and orders both shot up and second-quarter exports are expected to benefit from the euro's fall against other major currencies owing to the euro zone debt and deficit crisis.
But government efforts to get their finances in order could well dampen euro zone economies later this year, economists have warned.
