German business expectations have dipped sharply according to data released from the Ifo Institute.
While the April report shows strong current conditions, it shows a weakening in the outlook for the next 6-months, with its score falling from 106.5 to 104.7. The Ifo Institute utilizes a monthly survey to gain its results, and indexes them back to the year 2000, which is represented by a 100 score. Essentially, if the number is falling for the business outlook, businesses expect things to get worse.
The survey also shows a slip-up in retail and wholesaler confidence, while construction shows improvement.
This slide could be driven by rising prices across the eurozone, particularly in energy costs, that have recently pushed the ECB to hike interest rates. The rate hike itself may also be discouraging for businesses, who are concerned it will increase their costs of borrowing, or the costs of borrowing of their consumers.
Note the more pronounced dip in the business expectations portion of the survey.
[credit provider=”Ifo Institute” url=”http://www.cesifo-group.de/portal/page/portal/ifoHome/a-winfo/d1index/10indexgsk”]