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Germany's business climate index dropped to 91.7 points in May from 93.4 in April, breaking a six-month increasing trend.
The decline, largely due to more pessimistic expectations, was seen across sectors.
Manufacturing witnessed a sharp fall in business climate, while trade sector index also suffered a significant decrease; incoming orders reduced.

Germany’s business climate index fell to 91.7 points in May, after 93.4 points (seasonally adjusted) in April 2023—marking the first decline after six increases in a row. Driving this development are the significantly more pessimistic expectations. German companies are sceptical about the upcoming summer.

In manufacturing, the business climate was much worse, with expectations seeing a particularly steep decline—at 6.3 in April and -0.3 in May. This was the largest decrease since March 2022 after the start of the war in Ukraine. The deterioration in expectations can be seen in nearly all industries. Managers also evaluated the current situation as less positive and incoming orders fell, according to the ifo Business Survey, May 2023.

The trade sector index saw a major decline at -10.7 in April and -19.1 in May. The indicator of the current situation has returned to negative territory after five months and scepticism regarding expectations made a marked increase. Sentiment deteriorated especially in wholesale.

Fibre2Fashion News Desk (NB)

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German business climate index falls, halts six-month gain streak

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