German Business Confidence May Drop For A Seventh Consecutive Month In Nov.

Today's Ifo business climate report will probably show that German business confidence resumed its drop for a seventh straight month in November, beyond the lowest level in more than 2 1/2 years recorded in Oct., as the lingering European debt crisis continues to weigh on growth prospects in the euro region's largest economy.

The Ifo institute will announce that business climate indicator, based on a survey of 7,000 executives, plunged from 100 in October to 99.5 this month, according to median estimates.

Last week, German ZEW Survey - Economic Sentiment- retreated to -15.7 points in November, from -11.5 points in October.

Still, the debt crisis is affecting Germany's export as it fell in September at the fastest pace since late last year, while Germany's third quarter GDP (final reading) due today may show that overseas sales plummeted to 1.0% in the third quarter from 2.5% in the three months through June.

Whilst sales outside the euro area has helped German exports, it was dragged down by the drop in orders from the euro zone by 9.1% in September, giving a clear indication about the effect of the crisis on the whole 17-nation region.

The German economy probably grew 0.2% in the three months ended September, according to forecasts, yet it is predicted to face a drop in the final months of the year as euro-area and global demand for its exports weakens, according to the Bundesbank monthly report released on Monday.

A report released yesterday showed that German services activity slipped to 48.0 in November from 48.4 the previous month, while manufacturing edged up to 46.8 in November from 46.0 the previous month, reminding that a reading below 50 indicates a contraction.

In the euro area, a composite of manufacturing and services resumed its contraction to record 45.8 this month, rising slightly from a prior of 45.7.

The ECB left its benchmark interest rate unchanged at 0.50% this month, where the ECB bulletin for the monetary decision mentioned that economic activity in the euro area is expected to remain weak, especially in the second half of 2012, as all indicators refer to this, while in 2013 growth momentum is likely to remain anemic since the risks surrounding the economic outlook for the euro area remain on the downside.

The ECB cut its growth forecasts as it now foresees a contraction of 0.5% this year, which higher than the 0.3% contraction anticipated three months ago, while lowered growth forecasts for 2013 to 0.3% from prior estimates of 0.6%.

Analysts expect Ifo’s measure of executives’ expectations to decline to 93.0 from 93.2, while a gauge of the current situation to drop to 106.0 from 107.3.