Confidence among German businesses dropped for the second month in a row as rising oil prices weigh on the global economic outlook and adds pressure on domestic consumer spending, according to Bloomberg. On Thursday, the Ifo Institute reported that its business climate index dropped to 110.4 in April from 111.1 in March, which was only slightly worse than economists’ expectations. The survey of 7,000 executives posted its highest reading on 20 years of records at 111.3 in February. However, the gauge of the current situation gained half a point to 116.3, while expectations dropped almost two points to 104.7 in April.
Andreas Moeller of WGZ Bank said the index has peaked, but added that “it’s still at a remarkably high level.” Moeller continued, “While growth remains robust, German companies will have to get used to the fact that the pace of growth will be slow.” Nick Kounis of ABN Amro said the expectations indicator roughly tracks quarterly gross domestic product growth, and said, “The recent decline may be a sign that the German economy is losing some of its momentum,” and pointed to rising oil prices, the rise in the euro, fiscal consolidations and an overall slowdown of global economic growth as key factors.