(Alliance News) - Sentiment among German businesses worsened significantly in April, according to survey results published by the Ifo Institute on Friday.

The Ifo business climate index for Germany registered 84.4 points in April, down from 86.4 in March and below consensus for 85.5 points.

April's result was the lowest since May 2020, Ifo noted, with companies pessimistic about the current trading environment and outlook for the months ahead, as they are pressured by cost inflation resulting from conflict in the Middle East.

The chemical and service sectors showed particular concern, as did logistics firms, whose outlook Ifo described as "grim". Expectations within the construction sector also took a dive.

"Retailers are worried in particular that consumers will be more reticent due to rising inflation," Ifo said. "Hopes for an upswing have been dashed for now."

This follows a tough data readout for the country on Thursday, when S&P Global released flash purchasing manager's index results, saying the German economic recovery has been "stopped in its tracks" by the US-Israel war with Iran.

The flash PMI composite output index registered 48.3 points in April, falling below the 50-point mark that separates growth from contraction, and coming in below March's reading of 51.9 points. The April score was the lowest in 16 months, S&P Global noted.

By Holly Munks, Alliance News reporter

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