Germany's Ifo Index Falls as Second Wave Takes Toll on Business Sentiment --Update

--German business sentiment fell in October, ending a five-month rising streak

--Companies' assessment of their current situation improved slightly, but their expectations worsened

--Business climate improved for manufacturing, but worsened for the trade, service and construction sectors

By Maria Martinez

German business sentiment fell in October after increasing for five consecutive months, the Ifo Institute said Monday.

In view of rising coronavirus cases, German businesses are becoming increasingly worried, Ifo said.

The Ifo business-climate index came in at 92.7 points in October, compared with a downwardly revised 93.2 points in September. Economists surveyed by The Wall Street Journal had forecast it at 92.9 points.

Companies' assessment of their current situation improved slightly, rising to 90.3 points in October from 89.2 points in September.

However, companies are considerably more skeptical regarding developments over the coming months, Ifo said. Expectations declined, with the component falling to 95.0 points from a revised 97.4 points in September, Ifo said.

The Ifo index is based on a poll of about 9,000 companies in manufacturing, services, trade and construction.

In manufacturing, the business climate indicator is back in positive territory for the first time since June 2019, the report said. The index rose to 1.6 points from minus 0.5 points in September, as many more companies were satisfied with their current situation.

In the service sector, however, the business climate worsened notably, falling to 3.9 in October from 6.9 in September. Service providers were less satisfied with their current situation and the optimism they showed in recent months with regard to the business outlook has disappeared.

In trade, the business climate index fell slightly, to minus 0.1 from 0.3 points in September. While companies are more pessimistic about the coming months, they were more satisfied with their current business situation, Ifo said.

In construction, too, the business climate stopped climbing and fell to 0.8 following a steep increase to 3.3 in September.

Write to Maria Martinez at maria.martinez@wsj.com


  (END) Dow Jones Newswires
  10-26-20 0550ET
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