(Bloomberg) -- German businesses unexpectedly became more pessimistic about the economic outlook as the country continues to battle a stubbornly high rate of coronavirus infections and supply constraints weigh on the recovery.
The Ifo institute’s gauge of expectations for the next six months fell to 99.5 in April from 100.3. Economists surveyed by Bloomberg had predicted a gain. At the same time, an assessment of current conditions improved.
While Germany has significantly sped up its vaccination campaign, the infection rate is high and businesses are facing severe curbs on activity. Nighttime curfews have been in place since Saturday across vast parts of the country, and many shops were forced shut after the government tightened restrictions.
“Both the third wave of infections and bottlenecks in intermediate products are impeding Germany’s economic recovery,” Ifo President Clemens Fuest said.
Surveys of purchasing managers on Friday suggested that the wider euro area is turning the the page on the pandemic, after on-and-off lockdowns dragged it into a double-dip recession.
Services grew in April for the first time in eight months, a milestone for a sector that has been hamstrung by some of the worst restrictions since the outbreak. The region’s manufacturing upturn, the strongest in more than two decades of data collection, continued to be led by Germany.
The recovery is expected to gain momentum in the second half of the year, as lockdowns ease and the European Union’s 800 billion-euro ($966 billion) recovery fund is being rolled out.