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Germany’s closely watched Ifo Business Climate index edged up to 89.0 in August from 88.6, marginally beating economists’ expectations for 88.8. The improvement was driven by a rise in the expectations component to 91.6, its highest level in three months, even as the current-assessment gauge slipped to 86.4, underscoring the economy’s uneven momentum. The brighter outlook among German companies contrasts with deteriorating household sentiment. The GfK Consumer Climate survey, released two days later, showed confidence is expected to fall for a third straight month in September to –23.6, below the consensus of –21.5 and the weakest reading since March. Survey authors cited mounting concerns over job security and persistent inflation worries as key factors dampening willingness to spend. Signs of softer confidence were not confined to Germany. In Switzerland, the UBS/ZEW expectations index for August plunged to –53.8 from 2.4, pointing to a sharp deterioration in investor outlook across the Alps. Together, the data highlight the fragile state of sentiment in Europe’s largest economies as they contend with higher energy prices, rising unemployment and geopolitical uncertainty.
