German Business Confidence Slides as Economy Seen Stalling

(Bloomberg) -- German business sentiment deteriorated amid signs economic growth ground to a temporary halt and as risks surrounding a U.S.-China trade spat and a disorderly Brexit increased.

The Ifo institute’s gauge of corporate confidence fell to 102.8 in October after a drop to 103.7 in September. The median forecast in a Bloomberg survey was for a decline to 103.2. Measures for current conditions and expectations also slid.

German Business Confidence Slides as Economy Seen Stalling

Data from Europe’s largest economy have disappointed lately and waning optimism signals Germany may be more vulnerable to risks than commonly thought. The Bundesbank has expressed confidence that growth will pick up again after stalling in the third quarter, yet private-sector activity slowed in October to the weakest since 2015 and companies from Daimler AG to HeidelbergCement AG cut their profit forecasts.

Germany’s reliance on large industrial exports leaves the country particularly exposed to frictions in global trade. Deadlocked negotiations between the U.K. and the European Union over post-Brexit trade and the continued spat between the U.S. and China are adding to uncertainty.

Ifo’s measure of current conditions declined to 105.9 this month from a revised 106.6, while expectations fell to 99.8 from 100.9.

The assessment provides one more piece of information for European Central Bank officials, who are currently reviewing the economic outlook for the euro area. They will announce their policy decision later on Thursday.

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