Index falls to 86.6 from 87.0
Forecast for 86.0
Analyst No recovery for time being

BERLIN, Aug 26 Reuters German business morale fell for a third consecutive month in August, a survey showed on Monday, pushing back recovery hopes for Europe39;s largest economy.

The Ifo institute said its business climate index fell to 86.6 in August from 87.0 in July, though it came in above a forecast by analysts polled by Reuters for a reading of 86.0.

The German economy is increasingly falling into crisis, said Ifo president Clemens Fuest.

Companies were both more pessimistic and assessed their current situation as worse, Ifo found in its survey of around 9,000 managers.

The mood in industry, in particular, has noticeably deteriorated, while service providers also saw a dip, Ifo found.

The German economy has settled into stagnation, said Ifo economist Klaus Wohlrabe, citing a lack of orders across all sectors and weak investment and adding that consumers were reluctant to spend due to uncertainty over inflation.

Wohlrabe predicted that the third quarter could bring a further decline in German gross domestic product GDP, which unexpectedly contracted by 0.1 in the second quarter.

The index measuring current conditions fell to 86.5 from 87.1 the month before, while expectations were down only slightly, at 86.8 from a slightly upwardly adjusted 87.0.

NO GROUNDS FOR OPTIMISM

There are not too many reasons for optimism at the moment, said LBBW bank39;s Elmar Voelker.

He…