German business confidence fell once more in September, this time to its lowest level in two and a half years, as growth slowed as well. Economists had expected it to move in the other direction.
Bloomberg reported Monday that the Munich-based Ifo Institute said its business climate index fell from 102.3 in August to 101.4, a level it has not seen since February of 2010. A Bloomberg survey of economists showed that the expectation was for a median increase to 102.5.
Growth and capital investment both dropped as well, with the former decreasing to 0.3% in Q2 from Q1’s 0.5% on lower demand from eurozone countries. That led companies to put off spending money on investments such as plants and machinery—both were down 2.3% in Q2, with an overall decrease of 0.9% in capital investment for the quarter.
“Today’s Ifo index shows that German companies remain skeptical about the economic impact of Mario Draghi’s magic,” Carsten Brzeski said in the report. Brzeski, senior economist at ING Group in Brussels, continued, “Despite fears of a looming eurozone breakup clearly fading away, German businesses are downscaling their expectations. The structural adjustments in Germany’s eurozone trading partners will take time and will dampen demand for German products.”