(Bloomberg) -- German business confidence continued to drop in March, suggesting that companies’ qualms over a potential trade war are dampening optimism even amid the strongest economic upswing in years.
The Ifo Institute’s gauge of business sentiment fell to 114.7 from 115.4 in February, marking the second month of declines. Economists surveyed by Bloomberg predicted a reading of 114.6.
Last year the German economy saw the most impressive growth run since 2011, and the Bundesbank says that trend should have lapped over into the first quarter of the current year. Still, after U.S. President Donald Trump’s administration imposed tariffs on steel and aluminum and threatened to tax foreign cars, European leaders are intensifying efforts to thwart a brewing trade war that could undermine Germany’s export-driven economy.
Those concerns are spreading. Germany’s private-sector economy grew at the slowest pace in eight months in March, with factories pulling back amid risks from bottlenecks to trade, according to IHS Markit. A ZEW index tracking German investor sentiment showed earlier this week that confidence is waning as experts adopt a more cautious stance on trade. EU leaders plan to discuss their response in the dispute with the U.S. on Thursday.
Ifo’s assessment of current conditions dropped to 125.9 in March from a revised 126.4, Ifo said. A gauge of expectations fell to 104.4 from 105.4.
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