In August, the German IFO business climate indicator fell back to its lowest level in more than one year. The headline index dropped from 112.9 to 108.7, while the consensus was looking for a more moderate decline to 111.0. The details show a sharp deterioration in the expectations sub-index (100.1 from 105), but also the current assessment sub-index (121.4 from 118.1) weakened significantly in August. The breakdown shows also that weakness is wide-spread across sectors: manufacturing (15.7 from 23.3), construction (-6.4 from -0.7), wholesale trade (7.1 from 18.0) and retail trade (1.6 from 16.5). The data confirm again that economic growth in Germany is slowing sharply, but the IFO added that it would not yet talk of a recession. Nevertheless the sharp correction on the equity markets might have exaggerated the move somewhat.