BERLIN, Jan. 26 (Xinhua) -- German business sentiment remained at a low level in January, a survey showed on Monday, underscoring the continued weakness in Europe's largest economy amid tariff threats and persistent industrial headwinds.
The ifo business climate index was unchanged at 87.6 points after seasonal adjustment. Among its four components, sentiment improved in manufacturing, construction and trade, but those gains were offset by a deterioration in the services sector.
"The German economy is starting the new year with little momentum," ifo president Clemens Fuest said. While companies reported a slight uptick in their assessment of current conditions, expectations for the next six months became more cautious, he added.
Capacity utilization among manufacturers fell further in January and remained well below its long-term average, ifo said, adding that sentiment in both retail and wholesale trade also stayed below historical norms.
Jens-Oliver Niklasch, senior economist at the Landesbank Baden-Wuerttemberg (LBBW), described the latest reading as a disappointing start to the year. He warned that despite recent signs of recovery in some other indicators, economic data in the coming weeks could again fall short of expectations.
"An unchanged ifo index in January reflects the uncertainty that has hit the German economy again on the back of geopolitical tensions and tariff threats," Carsten Brzeski, global head of macro at ING Research.
Still, Brzeski pointed to signs that a recovery could be taking shape, noting that German industrial orders had risen for three consecutive months and that planned fiscal spending measures were gradually being rolled out.
Germany's economy grew by just 0.2 percent in 2025 after contracting for two consecutive years. The economy ministry is due to publish its economic forecasts for this year on Wednesday, while economists expect growth of between 0.8 percent and 1 percent. However, they cautioned that external pressures such as U.S. tariffs, along with the pace of domestic reforms, will remain key determinants of the country's growth outlook. ■