GERMAN business morale deteriorated for the fourth month running in October as supply bottlenecks in manufacturing, a spike in energy prices and rising COVID-19 infections are slowing the pace of recovery in Europe’s largest economy from the pandemic. The Ifo institute said yesterday that its business climate index fell to 97.7 from an upwardly revised 98.9 in September. This was the lowest reading since April and undershot the 97.9 consensus forecast in a recent poll. The weaker-than-expected business sentiment survey was followed by a grim outlook from Germany’s central bank, which said in its monthly report that economic growth was likely to slow sharply in the fourth quarter. The Bundesbank added that full-year growth was now likely to be “significantly” below its 3.7 percent prediction made in June. “Supply problems are giving businesses headaches,” Ifo president Clemens Fuest said, adding that capacity utilization in manufacturing was falling. “Sand in the wheels of the German economy is hampering recovery.” Half of all industrial companies are planning to hike prices due to the continuing supply problems, which is a record high in the survey, Ifo economist Klaus Wohlrabe said. The bottlenecks for intermediate goods and raw materials are spilling over from manufacturing to other sectors of the economy too, Wohlrabe added.(SD-Agencies) |