German industry stays gloomy

Traders worry about Germany's economic future

Germany's once-mighty manufacturing industry remains firmly in the doldrums, even if the rest of German business is foreseeing a slightly brighter future, new research suggests.

The data comes from the closely-watched Ifo survey of business expectations, out on Monday and showing a slight decline in the overall level of confidence.

But the fall, Ifo president Hans-Werner Sinn said, was entirely the result of manufacturing gloom.

In the construction, retail and wholesale trades, the mood was more buoyant, he said.

Choppy waters

The numbers point to further declines in the months ahead, according to analysts.

"The Ifo does not look good, and shows that sentiment in the German business community is still deteriorating," said Audrey Childe-Freeman of CIBC World Markets.

"All in all, the survey highlights the need for a rate cut to stimulate the economy."

The main October Ifo index fell to 87.7 from 88.2 in September, slightly above forecasts.

The business expectations index, intended to portray forward-looking assessments of the months to come by the thousands of businesses whose response make up the survey, fell to 97.9 from 99.3 in September.

But it was well above last October's reading of 89.7.