German business confidence 'slumps'

Business confidence in Germany dropped to a six-month low in May, as companies grow increasingly pessimistic in the face of a resurgence in the long-running eurozone debt crisis, data showed Thursday. The Ifo economic institute's closely watched business climate index dropped to 106.9 points in May from 109.9 points in April, even though analysts had been expecting only a very modest decline in the index this month. The drop brings to an end a six-month rally in business confidence in the Europe's biggest economy and brought the barometer down to its lowest level since November 2011. "The Ifo index fell sharply in May. The recent surge in uncertainty in the eurozone is impacting the German economy," said Ifo president Hans-Werner Sinn. "Assessments of the current business situation deteriorated clearly and companies also expressed greater pessimism about their business outlook." Ifo calculates its headline index on the basis of companies' assessments of their current business and the outlook for the next six months, with 100 being the long-term average. The outlook sub-index tumbled to 100.9 points in May from 102.7 points in April and the sub-index measuring current business slumped to 113.3 points from 117.5 points.