German business sentiment worsens further in August - Ifo

BERLIN (Reuters) -German business morale deteriorated more than expected in August, falling for the fourth month in a row, a survey showed on Friday.

The Ifo institute said its business climate index stood at 85.7, down from 87.4 in July. Analysts polled by Reuters had forecast a reading of 86.7.

Assessments of the current situation fell to their lowest level since August 2020 and companies expectations for the next six months were also increasingly pessimistic.

"The German economy is not out of the woods yet," Ifo president Clemens Fuest said.

Weak new orders are the main reason for the pessimism, according to Klaus Wohlrabe, head of surveys at Ifo. Export expectations have declined further, he added.

Sentiment among German managers has darkened further across all sectors, the survey showed.

"The signs for an economic recovery are bad for the time being," said Claus Niegsch, an analyst at DZ Bank.

The German economy stagnated in the second quarter compared to the previous three months, following a winter recession, data from the statistics office showed on Friday.

High interest rates, stubbornly high prices and a lack of impulses from foreign trade will continue to weigh on the economy in the second half of the year, Niegsch said.

"This means we are likely to slip into another recession in the last two quarters of this year before a recovery can begin next year," he said.

(Reporting by Maria Martinez and Rachel More, Editing by Friederike Heine and Mark Potter)