Key German business indicator unexpectedly falls in October

A key indicator of German business optimism unexpectedly fell modestly in October but remains at a fairly high level following five months of increases.

The Ifo index released Friday slipped to 107.4 in October from 107.7 the month before. The consensus in the markets was for the index to rise modestly to 108.0.

Despite the decline, ING economist Carsten Brzeski said the German economy remains in good shape. However, he said concern over the U.S. budget and its possible impact on economic activity, and a stronger euro exchange rate "are not the most favorable mix for the German export sector."

The index is considered a leading indicator showing where the economy may be headed in the months ahead. It is based on a survey of 7,000 German businesses.