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German sentiment still falling

A KEY gauge of German business sentiment fell in March to its lowest level since November 1982, a clear indication that the recession in Europe's biggest economy continues unabated, said the Ifo Institute, a Munich-based research institution.

The Ifo business climate index slipped to 82.1 points in March compared with 82.6 points in February.

"In manufacturing, the business climate remains largely unchanged," the Institute said yesterday in its report. But "with regard to foreign business, the exporting firms are more pessimistic than they were in February. Even more manufacturing firms plan to reduce staff numbers."

"No good news from the corporate sector at the end of the first quarter of the New Year," UniCredit economist Alexander Koch wrote in a note.

But despite the dip in the headline index, the companies surveyed in the report cited an improvement in their respective outlooks, sending the index for expectations for the coming six months up to 81.6 points for this month from 80.9 points in February.

"In the past this was a reliable signal for a trend reversal and a subsequent recovery of the economy," Koch said. "But does this also hold true for the current unprecedented situation? We agree that the vicious circle has been broken. But it still remains a very open question when the German economy will achieve at least stabilization."

Wholesale worsens

Ifo said that in wholesaling the business situation worsened in March and that firms are also more pessimistic regarding the six-month outlook.

"As a result, the business climate has cooled further," said Hans-°?Werner Sinn, Ifo's president. Ifo said the business climate for the wholesaling industry reported a decline to minus 31.6 points in March from minus 27.9 points in February.

The retailing industry saw a drop to minus 28.2 points in March from minus 24.3 points in February.

Construction businesses gave more favorable assessments. The building sector's climate index improved to minus 22.2 points in March from minus 24.5 points.

However, in the manufacturing sector it deteriorated to minus 42.9 points from minus 42.8 points.


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