ifo Media Center
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Order Shortage in Residential Construction in Germany Eases Slightly
The order shortage in residential construction in Germany has eased slightly, as reported by 50.2% in June, down from 51.7% in May. “The lack of new orders continues to be a major problem. House builders are cautious, partly because the European Central Bank’s key interest rate cut is only a first step for the time being. Not much has changed as yet with regard to financing costs, as is also reflected in the trend in building permits,” says Klaus Wohlrabe, Head of Surveys at ifo.
Construction and Manufacturing in Germany Have More Difficulty Obtaining Loans
German companies have somewhat more difficulty obtaining new loans, according to surveys by the ifo Institute. In June, 27.1% of companies in ongoing credit negotiations reported restraint on the part of banks; in March, the figure was 25.2%. Caution rose particularly sharply in the construction industry and manufacturing. “In view of weak investment in Germany, easier access to loans would be desirable,” says Klaus Wohlrabe, Head of Surveys at ifo.
Geopolitics and Trade: German Economists Experts' Assessment of Dependencies on China
On 4th July, the European Commission has imposed preliminary countervailing duties on electric cars made in China. Extensive investigations by the European Commission have shown that Chinese car manufacturers benefit from high state subsidies along the value chain (European Commission, 2024). These subsidies distort competition to the detriment of European manufacturers. The countervailing duties are between 17% and 38%, depending on the manufacturer. In the 47th ifo and FAZ Economists Panel, we take this trade dispute as an opportunity to ask German economics professors for their assessment of trade relations with the People’s Republic of China. 162 economists took part in the survey conducted from 25th June to 2nd July.
The 4-Day Week and Statutory Incentives to Hire Skilled Foreign Workers
In the second quarter of 2024, the Randstad ifo Personnel Manager Survey revolved around the 4-day week and possible positive and negative effects resulting from it. Interactions with the shortage of labor and skilled workers as well as the influence of statutory incentives to hire skilled foreign workers were also surveyed.
ifoCAST
ifoCAST generates forecasts of current German GDP with the help of a statistical model that works with historical correlations. These forecasts do not necessarily have to correspond to the published ifo Economic Forecasts, which also take expert knowledge into account.
ifo Economic Forecast for Eastern Germany and Saxony Summer 2024: East German Economy Growing More Strongly Than the West
The East German economy is growing more strongly than Germany as a whole. Its output is expected to increase by 1.1% in 2024, significantly more than in Germany as a whole (0.4%). Growth in Saxony is likely to be 0.4% and thus as strong as Germany as a whole, but lower than the average for Germany’s eastern states. Even the development in the first quarter of the current year was positive, whereas it was sluggish in Germany as a whole. “We are seeing strong growth in eastern Germany, particularly among consumer-related service providers; at the same time, manufacturing here is less affected by production cutbacks,” says Joachim Ragnitz from the Dresden Branch of the ifo Institute. “That means eastern Germany will probably grow more strongly this year.” In Saxony, however, manufacturing and construction are weighing on the overall result.
Sentiment in the German Automotive Industry Clouds Over Somewhat
The business climate in Germany’s automotive industry deteriorated slightly in June compared to the previous month. The indicator fell to -9.3 points from -9.1* in May. “Like the German economy in general, the German automotive industry doesn’t seem to be able to really pick up momentum,” says Anita Wölfl, a specialist at the ifo Center for Industrial Organization and New Technologies.
ifo Business Climate Index Saxony Remains at Previous Month’s Level (June 2024)
The ifo Business Climate Index in Saxony remained at the previous month’s level in June. The barometer of business sentiment in Saxony’s economy stayed at 95.0 points. The companies surveyed provided assessments of their business situation that were somewhat better than the previous month, but lowered their business expectations slightly.
Price Expectations Fall Slightly
The ifo price expectations in Germany fell slightly to 15.9 points in June, down from 16.1* in May. In manufacturing and consumer-related industries in particular, somewhat fewer companies intend to raise their prices than in the previous month. “The inflation rate is therefore likely to continue its slow decline and fall below the two% mark in August for the first time since March 2021,” says Timo Wollmershäuser, Head of Forecasts at ifo.
Business Climate in the Retail Sector Deteriorates in June
The ifo Business Climate in Germany’s retail deteriorated in June, finds the latest ifo Institute surveys. The indicator fell to -19.5 points from -13.3* points in May. Retailers assessed their current business situation as poorer. Their expectations for the coming months have clouded over considerably. “Many retailers cannot be satisfied with how business trended in the first half of 2024,” says ifo expert Patrick Höppner. Although consumers’ disposable incomes have risen, these increases were saved instead of being spent on additional consumption.
ifo Business Climate Index for Eastern Germany Slips Slightly (June 2024)
The ifo Business Climate Index for Eastern Germany fell slightly in June. The barometer of business sentiment for the regional economy in eastern Germany declined to 92.4 points, down from 92.7 points in May. The eastern German companies surveyed provided assessments of their business situation that were somewhat worse than the previous month and lowered their business expectations slightly. The upward trend of recent months has not continued.
ifo Employment Barometer Falls Slightly (June 2024)
Companies in Germany are looking to hire less staff. The ifo Employment Barometer fell to 95.9 points in June, down from 96.3 points in May. “A lack of orders is deterring many companies from expanding their workforce,” says Klaus Wohlrabe, Head of Surveys at ifo. “If anyone, it’s service providers who are tending to hire new employees.”
ifo Export Expectations Fall (June 2024)
Sentiment in the German export industry has deteriorated slightly. The ifo Export Expectations fell to -1.0 points in June, down from +0.2 points in May. “No clear direction is currently emerging,” says Klaus Wohlrabe, Head of Surveys at ifo. “The export economy still has plenty of room for improvement.”
ifo Business Climate Index declines (June 2024)
Sentiment has deteriorated at companies in Germany.The ifo Business Climate Index declined in June to 88.6 points, down from 89.3 points in May. This was due to more pessimistic expectations. However, the assessments of the current situation remained unchanged. The German economy is having difficulty overcoming stagnation.
ifo Economic Forecast Summer 2024: New Hope, But Not (Yet) a Summer Fairytale – German Economy Slowly Working its Way Out of the Crisis
Price-adjusted gross domestic product will increase by 0.4% this year and by 1.5% next year.
Business Climate Index Rises in Germany’s Residential Construction
The business climate index in residential construction in Germany has risen significantly, but the majority of companies remain pessimistic. Its index managed to climb from -52.3 points to -46.4 points. Expectations and the situation improved at a very low level. “Housebuilders are hoping that the worst of the economic downturn is behind them,” says Klaus Wohlrabe, Head of Surveys at ifo. “But the road to recovery is still long.”
Increase in Short-Time Work Halted in German Manufacturing
German manufacturing companies responded to the economic slowdown in winter with significantly more short-time work. Although it is likely to remain high in the coming months, it is not expected to worsen any further. In the second quarter, 18.8% of manufacturing companies responded that they were planning to introduce short-time work in the next three months.
Football World Cups and European Championships Barely Improved Sentiment in the German Economy
Sentiment in the German economy has barely improved during World Cups and European Championships. “At the time of the 2006 World Cup in Germany, there was initially a sense of anticipation in the ifo economic surveys. In the 6 months before the World Cup, the probability of ‘better business’ in the coming months rose by 1.1%,” says Klaus Wohlrabe, Head of Surveys at ifo. “After the World Cup, German companies actually found their business situation slightly better, with the probability of ‘good’ increasing by 1.1%. During and after the World Cup, however, there were no more effects on expectations,” he adds. “We suspect something similar now for the European Championship.”
German Chemical Industry Confident Again for the First Time
The business climate in the chemical industry in Germany recovered in May and returned to positive territory again for the first time since March 2022. Its index rose to +5.8 points from -5.2* points in April. “Confidence is returning to the German chemical industry,” says industry expert Anna Wolf from the ifo Institute.
Business Climate of the Self-Employed in Germany has improved
The business climate for the solo self-employed and microenterprises in Germany improved in May. The “Jimdo-ifo Business Climate Index for the Self-Employed” rose to -11.8 points*, up from -13.8 points* in April. Business fared better, with only a few self-employed expressing dissatisfaction with their current situation. Expectations also brightened up somewhat, although they were still marked by skepticism. “The self-employed are increasingly hoping that the worst of the economic downturn is behind them,” says ifo expert Katrin Demmelhuber.
