Market Analysis

German business sentiment declined for the third month in a row in August, according to a survey released on Monday, dampening hopes for a recovery in Europe's largest economy.

The Ifo institute reported that its business climate index fell to 86.6 in August from 87.0 in July, surpassing the 86.0 forecast by analysts surveyed by Reuters.

Ifo President Clemens Fuest remarked, "The German economy is increasingly falling into crisis."

The survey, which included responses from around 9,000 managers, revealed that companies were more pessimistic and had a worse assessment of their current situation. A persistent lack of orders across all sectors was highlighted, with Ifo economist Klaus Wohlrabe suggesting that Germany's gross domestic product could decline in the third quarter.

The index measuring current conditions dropped to 86.5 from 87.1 the previous month, while expectations decreased slightly to 86.8 from an upwardly revised 87.0.

LBBW bank's Elmar Voelker cited a turbulent global economy, geopolitical uncertainties, and forthcoming U.S. presidential elections as factors contributing to the bleak outlook, stating, "There are not too many reasons for optimism at the moment."

VP Bank Chief Economist Thomas Gitzel echoed this sentiment, saying, "There will be no economic recovery for the time being," and describing the German economy as precariously positioned between recession and minimal growth.

The Ifo survey aligns with recent purchasing managers' index (PMI) data, which also showed a contraction in business activity in August for the second consecutive month, and more severe than anticipated.

Paraphrasing text from "Reuters" all rights reserved by the original author.