German business confidence declined more than economists forecast amid signs that growth in the euro area’s largest economy would slow this quarter.
The Ifo institute’s business climate index, based on a survey of 7,000 executives, fell to 110.4 this month from 111.2 the prior month. Economists predicted a drop to 110.9, according to the median of 38 estimates in a Bloomberg News survey.
Germany is key to the recovery in the 18-nation euro area, which is struggling to pick up pace amid near-record unemployment and subdued pricing power.
Data yesterday showed Germany’s economy was driven exclusively by domestic demand in the first three months of the year, and the Bundesbank has said the expansion will cool this quarter.
“Exports will probably slow, but this is not a problem as we have strong domestic demand,” said Ulrike Kastens, senior economist at Sal. Oppenheim Group in Cologne. “The euro area is dividing again, with strong signals from Germany and Spain, while France and Italy remain causes for concern.”
A measure of current conditions unexpectedly declined, dropping to 114.8 this month from 115.3 the prior month, the Ifo report showed. A gauge of expectations slid to 106.2, the lowest reading since October.
The German economy expanded 0.8 percent in the first quarter as a mild winter boosted construction and private spending picked up, the Federal Statistics Office said yesterday.
Net international trade dragged on growth as imports outpaced exports.
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