• Ifo business climate index drops to 106.6 from 106.7
  • Gauge for current situation fell, expectations improve

German business confidence unexpectedly deteriorated in the latest sign that Europe’s largest economy is losing some of its pace.

The Munich-based Ifo institute’s business climate index fell to 106.6 in April from 106.7 the previous month. The median estimate in a Bloomberg survey of economists was for an increase to 107.1.

The Bundesbank said last week that it sees slowing momentum in the economy this quarter after a strong expansion in the first three months of the year. Global headwinds remain a concern even though the economy in China, Germany’s third-biggest trading parter, is showing signs of a steadiness after a slowdown caused ructions in international markets last year.

A measure of the current situation in Germany deteriorated to 113.2 from 113.8, the Ifo report showed. A gauge of expectations rose to 100.4 from 100.

The nation’s manufacturing and services sectors cooled slightly in April, leaving the economy in a phase of “unspectacular” growth, Markit said on Friday as it published a purchasing managers’ survey. Joblessness was unchanged in March, snapping a run of five consecutive declines, as employers struggle to absorb a wave of refugees.

Even so, German investor confidence climbed to the highest level this year in April as concerns over China eased and the European Central Bank added stimulus for the euro area, a report by the ZEW Center for European Economic Research showed last week.

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