German IFO numbers have painted a slightly depressed picture for business conditions with IFO business climate for October at 107.4 - the first monthly fall since April, and missing expectations of 108.0 and down marginally on September's 107.7.
Current assessment came in at 111.3 - down from 111.4 and versus expectations of an increase to 111.6. Expectations were at 103.6 after expectations of 104.5 and last month's figure of 104.2.
Ben May, European Economist and Capital Economics, says:
The fall in the German Ifo business sentiment in October provides another timely reminder that the euro-zone recovery remains fragile.
Encouragingly, on past form, the BCI still points to annual GDP growth of around 2%, compared to Q2’s 0.5% gain, suggesting that further strong quarterly gains in GDP are on the cards in the second half of this year. But note that the index has recently over predicted actual GDP growth and other surveys like the PMI, which also fell in October, paint a less upbeat picture. In all, while we expect the German recovery to continue, we see GDP growth picking up from about 0.5% this year to just 1.5% or so in 2014.