German business sentiment in free fall

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FRANKFURT – German business sentiment dropped sharply in July amid surging energy prices and risks of gas shortages, Germany’s key Ifo indictor showed today.

The index dropped to 88.6 points in July from 92.2 points in June, hitting the lowest level since 2020.

“Companies are expecting significantly worse business in the coming months. Besides, they were less satisfied with their current business situation,” said Ifo Institute President Clemens Fuest. “Germany is on the brink of recession.”

On Friday, S&P Global’s flash Purchasing Managers’ Index showed that German business activity unexpectedly shrank in July, as companies were hit by inflation pressure and supply-chain disruptions.