The Ifo said Thursday that its business.
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The sharp decline contrasted with a negligible drop in July when business leaders surprised forecasters by appearing to shrug off anxiety over Britain’s pro-Brexit vote.
The Munich-based Ifo institute’s business climate index fell to 106.2 from 108.3 in July.
Analysts surveyed by Factset had been expecting a slight rise to 108.5. Some 7,000 executives are asked about how they assess their current situation and, secondly, what their business expectations are for the next six months.
The expectations index slid to 100.1 in August from 102.1, below the expected level of 102.4.
An industry breakdown showed a second consecutive month of declining manufacturing-industry sentiment, particularly within the chemical and electronics industries, and a plunge in wholesaling and retailing.
In construction, the business climate remained at a record level, while domestic tourism boomed due to geopolitical crises overseas suggesting that the domestic economy is still doing well.
But one bright spot was construction, where firms had a more optimistic view of the coming months even as their view of current business clouded over.
Germany’s DAX fell further into negative territory after the Ifo data, sliding 1.1%, having been down 0.8% before the figures were released. The German economy has fallen into a summer slump.
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ING Bank economist Carsten Brzeski said it seems that German businesses always take a bit longer to digest the news but today’s Ifo suggests that German businesses have suddenly woken up to Brexit reality.
