German business confidence weakened to a four-month low in June as Greece crisis weighed on the current situation assessment and expectations of companies, results of a survey by the Munich-based Ifo Institute showed Wednesday.
The business confidence index fell to a four-month low of 107.4 in June from 108.5 in May. It was expected to ease to 108.1.
Although the Ifo survey points to an acceleration in Germany's economy in the second quarter, its fall in June suggests that Greece's crisis is starting to weigh on sentiment there, James Howat, a European economist at Capital Economics, said.
The Ifo institute upgraded its German growth projections as labor market underpin private consumption. The institute forecast 1.9 percent growth this year and 1.8 percent next year. Bundesbank has also estimated 1.7 percent growth for 2015.
The Berlin-based DIW think tank today said Germany will grow 1.8 percent this year and 1.9 percent in 2016. The economy is currently supported by domestic demand and the increase in employment.
ING-DiBa's Chief Economist Carsten Brzeski said even after today's drop, the level of the Ifo remains comfortably high. In fact, comparing the levels of the second quarter with the levels of the first quarter suggests a growth acceleration of the German economy in the second quarter, confirming positive growth outlook.
Ifo data today showed that the current conditions index slid to 113.1, while it was expected to fall to 114.1 from 114.3. This was the first drop in four months.
Falling for the third month, the expectations index dropped more-than-expected to 102 in June from 103 a month ago. The expected score for June was 102.4.
Business confidence in manufacturing and wholesaling declined in June, while that in construction improved for the third successive month. The business climate index for the service sector rose to 27.1 in June, the highest since July 2011.
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