By Maria Martinez
German business sentiment worsened again in October, as supply bottlenecks clouded the short-term outlook.
The Ifo business-climate index decreased to 97.7 points in October from 98.9 points in September, data from the Ifo Institute showed Monday. This is the fourth consecutive decrease of the indicator after it peaked at 101.8 in June.
The reading was below a consensus forecast from economists polled by The Wall Street Journal, who had expected the index to decrease to 98.0.
"Sand in the wheels of the German economy is hampering recovery," Ifo Institute's president Clemens Fuest said, regarding supply problems.
In October, companies were less satisfied with their current business and they were also more skeptical about the coming months, Ifo said.
The business expectations component fell to 95.4 in October from 97.4 the previous month. The measurement that gauges companies' current business situation also declined, falling to 100.1 from 100.4 in September.
The Ifo index is based on a poll of about 9,000 companies in manufacturing, services, trade and construction.
In manufacturing, the business climate index fell to 17.2 from 20.0 in the previous months, as companies are somewhat less satisfied with their current business and expectations are also clouding further.
Supply bottlenecks drove capacity utilization down 2.1 percentage points to 84.7 percent, Ifo said.
In the service sector, the business climate worsened again, falling to 16.5 in October from 19.1 in September. Companies were considerably less optimistic about the coming months. However, their assessments of the current business situation have slightly improved, Ifo said.
In trade, the index sank to 3.7 from 9.0 the previous month, as businesses were notably less satisfied with their current situation and they were also more pessimistic about the coming months due to supply bottlenecks.
Construction was the only sector in which the business climate index improved, going up to 12.9 in October from 11.1 in September. Expectations in this sector rose for the sixth consecutive month, the report showed.
Write to Maria Martinez at maria.martinez@wsj.com
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