German business climate index at 11-month low

The outlook for the German economy, Europe's biggest, clouded over significantly in January as business confidence fell to its lowest level in 11 months, the Ifo economic institute said on Monday. The Ifo institute's closely-watched business climate index fell by a steeper-than-expected 1.3 points to 107.3 points in January, the lowest level since February 2015, Ifo said in a statement.

Ifo calculates its headline index on the basis of companies' assessments of the current business environment and the outlook for the next six months. The sub-index measuring current business slipped slightly by 0.3 point to 112.5 points, while the outlook sub-index slumped by 2.2 points to 102.4 points, the institute said.

"Sentiment among German businesses weakened at the beginning of the year," said Ifo chief Hans-Werner Sinn. "Assessments of the current business situation were scaled back slightly, but remained very good. Business expectations, by contrast, clouded over significantly," Sinn said, calling the survey "an unpleasant surprise for the German economy". 

Analysts had been pencilling in only a modest decline this month to around 108.2 points. "It looks as global events have finally reached German companies' boardrooms." said ING DiBa economist Carsten Brzeski.