German sentiment down as industry plunges yet again
The most widely-watched indicator for the German economy, Europe's largest, plunged deeper into the red on Monday and there are signs of worse to come.
The Ifo index, which measures economic sentiment, fell in August to 94.3 from 95.8 in July, recording its 11th decline over the past 12 months.
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Just a year ago, the German export machine was firing on all cylinders with companies reporting labour shortages.
Now the risk is that the slump in manufacturing will seep into the wider economy.
"So far, it is only tentative signs like companies' profit warnings, a small increase in short-time work schemes and weaker consumer confidence, but these tentative signs could easily mutate into severe problems," said ING economist Carsten Brzeski.
The worsening economic outlook comes ahead of elections this weekend in Saxony and Brandenburg which could boost the far right.
"Almost exactly 30 years after the fall of the Berlin Wall, the country is again divided, at least when it comes to political preferences," Mr Brzeski said of the elections.