Munich/Nuremberg - The late-summer mood in the German economy has taken a turn for the worse with two key indices Tuesday showing both businesses and consumers increasingly worried about their prospects. In Munich, the Ifo-Institut for economic research said the business community's mood showed a surprisingly sharp downturn in August, with Ifo's monthly index dropping to 94.8 points, from 97.5 points in July.
While a downturn had been expected, the August drop was much higher than anticipated. The survey of companies covers their view of the current situation as well as the business outlook for the upcoming six months.
Ifo institute president Hans-Werner Sinn commented, "the German economy is heading increasingly towards economically treacherous waters."
In Nuremberg, meanwhile the market research company GfK reported a further downturn in consumer confidence - to a five-year low - although GfK noted that the drop was not as pronounced as those in preceding months.
The GfK index fell to 1.5 points, from 1.9 points in July. The August reading was the lowest since the summer of 2003, the company noted.
The index is a measure of consumers' assessment of their income situation and their prospects for purchasing big-ticket items in the foreseeable future.
Contributing to the mood of pessimism among consumers were worries about rising prices and further fallout from the international financial crisis, GfK said.
