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German business confidence drops over virus fears

July 26, 2021

Managers in Germany are not feeling overly optimistic about the coming months, a major business confidence barometer shows. Two major concerns are clouding their outlook.

A crane loading containers at the Rhine-Neckar port in Mannheim, Germany
The global supply chain for raw materials and other wares has been suffering disruptionImage: Uwe Anspach/dpa/picture-alliance

German businesses are unexpectedly feeling less confident about the future than they were in previous months of this year, according to the Munich-based Ifo insitute's monthly assessment of managers' morale.

Ifo's confidence barometer fell to 100.8 points in July, down from 101.7 in June. It is the first drop since January.

Analysts had expected the closely watched survey to go 0.3 points higher.

Despite the July drop, the indicator remains well above the level of 75.6 points to which it fell in April 2020 when the first wave of the pandemic was at its peak.  

Virus continues to weigh on the mind

According to Ifo, managers from the some 9,000 businesses covered in the survey were positive about their current situation but looked to the coming six months with increasing worry. Their main concerns, according to the institute, were bottlenecks in the supply of raw materials and fears that COVID-19 infections could resurge.

Although the infection rate in Germany is still relatively low compared with some other European countries, it has been on its way up again since early July.

The resurgence is being driven by the delta variant of the coronavirus, which is more infectious than the ancestral version and has now become dominant in many nations, including Germany.

tj/nm (AFP, AP)