BERLIN (Reuters) - German business morale dropped to its lowest in 14 months in August, its steepest decline since late 2008 that signals Europe’s bulwark economy is losing the momentum that has kept some of its euro zone peers going.
The Munich-based Ifo think tank said its business climate index, based on a monthly survey of some 7,000 firms, fell to 108.7 in August from 112.9 in July and compared with forecasts in a Reuters poll of 42 economists of 111.0..
According to Ifo data before the release, that was the biggest monthly drop since November 2008, when Germany was deep in recession.
Speaking after the data, Ifo economist Klaus Abberger told Reuters the slowdown of the U.S. economy and twin debt problems in the U.S. and Europe were the main reasons for the worsening outlook.
“The German economy has got infected,” Abberger said.
“I wouldn’t speak of a recession at this moment. The companies still have a cushion of orders. And not every cooling results in a recession, but the pickup is slowing very significantly,” Abberger added.
Economists have already worried that the data could presage a further slowdown from Germany’s record growth but have said a recession is not on the cards for now.
A subindex on expectations fell to 100.1, down from 105.0 and missing forecasts for a drop to 103.0.
Reporting by Annika Breidthardt, Sarah Marsh and Madeline Chambers, additional reporting by Paul Carrel and Noah Barkin in Frankfurt