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Business

German business confidence takes unexpected hit

The lack of growth momentum has put a damper on the mood among Germany's business leaders, a new survey by a leading research institute has shown. But the drop in confidence may not last long.

Business confidence among German executives posted a surprise fall in October, a survey released on Friday indicated.

A monthly index published by the Munich-based Ifo economic institute showed the indicator measuring the mood in boardrooms across Europe's biggest economy fell to 107.4 points, down from 107.7 in the previous month.

Analysts had expected the closely watched barometer to climb again after five consecutive months of gains, but the 7,000 business leaders polled no longer felt as optimistic about economic prospects as they did before.

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"Firms assessed their business outlook less favorably than last month," the think tanks' economist Kai Carstensen said in a statement.

He added that the sub-index gauging companies' assessment of their current situation also showed a slight drop in confidence, but remained above average levels.

"The German economy has not yet moved fully into gear," Carstensen concluded, adding that it was still lacking momentum, although it wriggled out of recession early this year and has had a very robust labor market with unemployment levels far lower than those seen in debt-stricken southern eurozone nations.

hg/pfd (Reuters, AFP, dpa)

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