"The German economy is doing alright but I'd expect a setback in the third quarter. Uncertainty continues to be high and that's why companies have little reason to invest strongly."
- Gerd Hassel, an economist at BHF-Bank AG
Mood amid German businesses was poised for a sixth consecutive monthly increase in October; however, markets were disappointed on Friday, as Ifo business climate index unexpectedly fell due to uncertainty over the strength of recovery in the Eurozone. A leading gauge of economic health in Europe's powerhouse eased to 107.4 this month from 107.7 a month earlier. Analysts, however, expected a figure of 108. A measure of current conditions stood at 111.3 points, compared with both expectations and September's level of 111.4. Additionally, the indications survey, which is designed to reflect companies' forecasts for the next six months, came in at 103.6 points, down from 104.2 in the prior month. Due to a drop in factory orders the Bundesbank said they expect the economy to slow down after a 0.7% expansion seen in the previous three months. Meanwhile, industrial production is stronger than expected, unemployment hovers around two-decade low, while investor sentiment is at the highest in more than three years, suggesting bright prospects for the economy. Earlier this month the government said they expect the economy to expand 0.5% this year and accelerate up to 1.7% in 2014.
Amid hopes of improvement in the Eurozone economy, the single currency soared 8% against the U.S. Dollar since July, threatening to undermine German exports.
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