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German Business Confidence Weakens For Fourth Straight Month

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German business confidence weakened for the fourth consecutive month in October to hit a six-month low as supply bottlenecks weighed heavily on expectations, survey results from the ifo Institute showed on Monday.

The business confidence index fell more-than-expected to 97.7 in October from revised 98.9 in September. The expected level was 97.9. This was the lowest since last April.

The current situation indicator came in at 100.1, down from 100.4 a month ago and below the economists' forecast of 99.4.

The expectations index dropped to 95.4 from 97.4 in the previous month. The reading was forecast to fall to 96.4.

Supply problems are giving businesses headaches, Clemens Fuest, ifo President said. Sand in the wheels of the German economy is hampering recovery.

"The fourth successive monthly fall in the Ifo Business Climate Index provides more evidence - if it were needed - that supply side disruption is causing the German economy to slow sharply and suggests that the problems are extending beyond manufacturing," Andrew Kenningham, an economist at Capital Economics, said.

The economist expects the economy to do no more than tread water in the last three months of the year.

In manufacturing, the business climate index fell once again. Companies were somewhat less satisfied with their current business and their expectations were also clouding further.

In the service sector, the business climate worsened again after a recovery in the previous month. Companies were considerably less optimistic about the coming months. However, their assessments of the current business situation were slightly improved.

In trade, business confidence weakened considerably in October. Businesses were notably less satisfied with their current situation and were more pessimistic about the coming months. Supply bottlenecks were weighing on sentiment.

In construction, the business climate improved further in October. Companies' assessments of their current situation were a little better. Moreover, the expectations index rose for the sixth consecutive time.

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