German IFO index drops to 101.4 in September: Mecklai

As seen in the below graph the IFO Business Climate Index for Germany is observed to be on a declining mode. The declining phase is witnessed from May 2012 wherein the figures printed today state that this is a fifth consecutive decline in the German IFO index. The companies surveyed under IFO underscored the uncertainty in the future and were pessimist about the future business outlook. And the sole reason for such a bleak scenario was the ongoing sovereign debt crisis.

The Business Climate Index dropped to 101.4 in September from 102.3 in August. This happens to be a lowest reading since March 2010. The debt crises have pushed 17 of the euro zone nations into recession thereby slashing a demand for exports from Germany.

The diminishing figures clearly state that ECB’s Draghi and monetary easing has failed to impact the pessimistic sentiment. And such a declining trend if continues it would be very negative for the manufacturing sector in Germany which is the power machine for the entire Euro zone and hence would continue to call for sub zero to negative GDP rates for the entire Euro zone.

The below graph depicts German IFO figures

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