By Scott Kanowsky
Investing.com -- German business confidence slumped by more than expected in June, dragged lower by "considerably" more pessimism for the second half of the year in the country's key manufacturing sector, according to data released on Friday by the Ifo Institute.
Ifo's closely-watched Business Climate Index - which measures sentiment in companies across Germany - fell to 92.3, down from 93.0 in May. Analysts had expected the number to decline to 92.9.
Ifo said the manufacturing sector - which makes up about a fifth of Germany's economy - assesses the current economic conditions as "slightly less good" due to soaring inflation and lingering supply constraints.
"Companies were somewhat less satisfied with their current business situation. Their expectations turned markedly more pessimistic. Rising energy prices and the threat of gas shortages are of great concern to German business," said Clemens Fuest, Ifo Institute President.
However, the outlook for service sector firms improved, boosted in part by strong summertime demand for hospitality businesses.