Carsten Brzeski, chief economist at ING, notes that the German Ifo index, dropped for a sixth consecutive month and came in at 98.5 in February, from 99.3 in January.
Key Quotes
“The drop was driven by both weaker current assessments and expectations, even though the current assessment lost more momentum than the expectations component. Today’s Ifo index somewhat undermines the tentative signs of stabilisation we saw earlier this week in the ZEW index and PMIs. The still-high uncertainties, mainly stemming from trade, China and Brexit are denting German business sentiment.”
“Previous episodes suggest that manufacturing and service activities in Germany have moved in tandem. It is only since the start of 2015 that a structural break between the two has occurred, with services (as a proxy for domestic demand) flourishing, while the manufacturing sector went through significant fluctuations. Only time will tell whether this decoupling will last or whether the domestic side of the German economy will also show cracks in the course of the year.”
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