Sentiment among German businesses falls more than expected in December

Sentiment among German businesses deteriorated more than anticipated in December, data published by the ifo institute showed Wednesday.

The ifo Business Climate index fell to 87.6 points in December from 88.0 points in November, worse than the FXStreet-cited consensus of an uptick to 88.2 points in December. November's index was revised down from 88.1 points.

The current assessment index was unchanged at 85.6 in December, however underperforming against the consensus of a slight increase to 85.7.

The expectations index declined to 89.7 points in December from 90.5 points in November, worse than the consensus of 90.5 for December. November's figure was revised down from 90.6 points.

Clemens Fuest, president of the Munich-based ifo institute, said: "Companies are more pessimistic about the first half of 2026, while their assessment of the current situation remained unchanged. The year is ending without any sense of optimism."

He added: "In the service sector, the business climate has fallen back into negative territory. Service providers were less satisfied with current business and reported lower expectations. The business climate declined in almost all service sectors. One exception is the restaurant business, reporting a very strong December.

"In trade, the index deteriorated. Assessments of the current situation have been revised downward. The outlook for the first half of the next year is also gloomy. Retailers were dissatisfied with Christmas sales.

"In construction, the business climate remained unchanged at a low level. On the one hand, companies assessed the current situation as worse. On the other hand, they are less skeptical about the coming months."

The ifo Business Climate index is based on around 9,000 monthly responses from businesses in Germany in manufacturing, the service sector, trade, and construction.

The index takes the year 2015 as comparative, with a figure of 100 points indicating the index being the same as that year, with figures below indicating worse sentiment than in 2015.