German business confidence drop in May

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The German business confidence probably fell for a third month in May, after a worsening debt crisis clouded the euro region?s growth outlook and the rising energy costs threatened to sap earnings.

Based on a survey, the Ifo institute?s business climate index (with 7,000 executives) dropped to 113.7 from 114.2 last month, the median forecast of 24 economists in a news agency?s survey.

The German economy, the largest in Europe, may seem to struggle to maintain its growth momentum as the euro region governments may toughen austerity measures to lower budget deficits, while surging energy costs squeeze household incomes.

?Even if Ifo falls from stratospheric levels, German business managers are still fairly sanguine about the future,? said Jens Sondergaard, senior European economist at Nomura in London. ?That should support investment in the next couple of quarters, even as German exports take a hit from fading global-growth momentum, while higher?oil prices?will hurt disposable income, risking weaker consumption.?

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