German firms 'more pessimistic'

German shoppers are feeling the strain

There are signs of growing gloominess among German companies, which have so far been resilient to the US slowdown.

Confidence among German businesses fell in April following three consecutive months of increases, according to the Ifo Institute's influential survey.

Its index, which is based on a monthly poll of about 7,000 firms, fell more than expected to 102.4 from March's figure of 104.8.

But the figures are still well above the long-term average of 96.5.

"After a brief brightening at the beginning of the year, the survey results indicate a slower pace of business activity," Ifo's Hans-Werner Sinn said.

"The forces of a slowdown evident since mid-2007 have gained strength again."

There was particular concern among analysts about the state of the retail sector.

"It was just a matter of time until the German economy would bow under the deterioration of the external environment," said Carsten Brzeski at ING.

"Numbers in the retail sector have been disappointing for some time and the German consumer is simply not willing to spend."