ifo Media Center
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Situation Much Better for German Automakers
The current business situation for German automotive manufacturers has improved significantly. In June, the indicator climbed to 37.5 points, up from 28.4 points* in May. Expectations, however, fell to -56.9 points, down from -10.3 points* in May. “Automakers are experiencing great uncertainty, comparable to the early days of the war in Ukraine or to when the risk of gas rationing in manufacturing shot up last fall,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies.
Business Climate in Germany’s Chemical Industry Clouds Over
The ifo Business Climate in Germany’s chemical industry deteriorated noticeably in June. The indicator fell to -28.3 points, down from -12.5 points* in May. Business expectations in particular took a further dip. They fell to -25.6 points, down from -5.5 points in May. “High energy and production costs aren’t the only things putting a strain on business in the chemical industry. The order situation is continuing to worsen for many companies due to persistently weak global demand for chemical products,” says industry expert Anna Wolf of the ifo Institute.
ifo Business Climate Index Saxony Sees Steep Decline (June 2023)
The ifo Business Climate Index for Saxony fell sharply in June. The barometer of business sentiment in Saxony’s economy slipped from 99.4 points in May to 94.2 points in June. The Saxony-based companies surveyed assessed their current business situation as perceptibly worse than in the previous month and scaled back their business expectations considerably.
German Federal Budget 2024: More Money for Defense, Education and Science, as Well as for Digital and Transport
As part of the negotiations on the 2024 federal budget, the German Ministry of Finance has stated that tax revenue in 2024 will not be sufficient to cover all spending requests. Serious savings and prioritization are needed. The 43rd ifo and FAZ Economists Panel is therefore dedicated to the 2024 federal budget. The survey, in which 177 economics professors participated, was conducted from June 20 to June 27, 2023.
Germany’s Wave of Price Increases Recedes
The wave of price increases in Germany will slowly peter out over the next few months. This is a finding from the ifo Institute’s survey. The ifo price expectations dropped to 16.3 points in June, down from 19.1 points* in May. Food and beverage retail experienced a steep decline from 61.4 points* to 45.6 points. The pace of price increases in that segment is expected to gradually lessen. “Overall, however, inflation for consumers will fall only very slowly, because for many service providers, price expectations are declining sluggishly; for example, they went down in hospitality from 34.2 points* to 32.9 points, and in travel agency activities from 46.5 points* to 45.5 points,” says Timo Wollmershäuser, Head of Forecasts at ifo.
ifo Business Climate Eastern Germany: Index Falls Again (June 2023)
Sentiment among companies in eastern Germany saw a decidedly strong decrease in June. The ifo Business Climate Index for the entire regional economy fell to 93.3 points, down from 96.0 points in May. While the companies surveyed lowered their assessments of the current situation slightly, their outlook for the next six months worsened drastically.
ifo Employment Barometer Rises Slightly (June 2023)
The willingness among companies in Germany to hire new staff has improved slightly. The ifo Employment Barometer rose to 98.4 points in June, up from 98.2 points in May. “But in manufacturing in particular, the sector’s budding pessimism is reflected in its cautious personnel planning,” says Klaus Wohlrabe, Head of Surveys at ifo. “Only service providers continue to consider hiring new people.”
Blockchain Technology in Use or Planned at 6.9% of Companies in Germany
Among German companies, 6.9% are currently using or are planning to use blockchain technology for their business processes. This is the finding of a recent survey conducted by the ifo Institute on behalf of the Hanseatic Blockchain Institute. Introducing the technology is a subject of discussion at 18.7% of all companies surveyed.
ifo Export Expectations Fall (June 2023)
Sentiment in the German export industry has deteriorated noticeably. The ifo Export Expectations fell to -5.6 points in June, down from +1.0 points in May. This is the lowest level since November 2022. “In addition to weak demand on the German domestic market, we’re now also seeing fewer orders from abroad,” says Klaus Wohlrabe, Head of Surveys at ifo. “This is bad news for Germany’s export economy.”
ifo Business Climate Index declines (June 2023)
Sentiment in the German economy has clouded over considerably. In June, the ifo Business Climate Index fell to 88.5 points, down from 91.5 points in May. Expectations were markedly pessimistic and companies’ assessments of their current situations were worse. Above all, the weakness in the manufacturing sector is steering the German economy into turbulent waters
ifo Economic Forecast Summer 2023: Inflation Slowly Easing – But Economy Still Faltering in Germany
Gross domestic product will decline by 0.4% this year and increase by 1.5% next year.
Noticeable Drop in Demand for Transport and Logistics Services in Germany
Reduced demand for transport capacity is causing concern among German transport and logistics companies. “The – in some cases very significant – price increases for many transport and logistics services have led to the recent drop in demand,” says ifo industry expert Patrick Höppner. What’s more, the currently subdued development of the economy as a whole is putting additional strain on the demand for transport services – especially in the freight transport sector. In the second quarter of 2023, 35.2% of transport and logistics companies reported insufficient demand, up from 33.8% in the first quarter.
Number of Short-Time Workers in Germany Rises Marginally
The number of short-time workers in Germany has risen slightly. It stood at 144,000 people in May, marginally higher than February’s 140,000*, according to estimates by the ifo Institute based on the ifo Business Survey and figures from the German Federal Employment Agency. “Short-time work isn’t playing a significant role in the current phase of economic weakness,” says ifo labor market researcher Sebastian Link. As a share of the workforce, the figure remained at 0.4%.
Business Climate for Self-Employed Turns Even More Negative
The business climate for Germany’s self-employed has deteriorated. This is a finding by the latest ifo survey for this segment (“Jimdo-ifo Business Climate Index for the Self-Employed”). The index fell from -3.2 points in April to -8.6 points in May. “The business community’s worry lines are deepening,” says ifo expert Katrin Demmelhuber. “Not enough new orders are coming in at present.”
Material Shortages Ease in German Manufacturing
German manufacturing is seeing fewer material shortages. In May, 35.3% of the companies surveyed reported shortages, down from 39.2% in April. “The easing provides a little relief to Germany’s manufacturers as they deal with the difficulties of the current economic situation,” says Klaus Wohlrabe, Head of Surveys at ifo. “They can process existing orders more quickly, thus sustaining production. At present, the companies surveyed have an order backlog equivalent to 4.3 months of production – much more than the long-term average of 2.9 months. The decline in orders is therefore not yet having too great an impact.”
Situation in Germany’s Automotive Industry Remains Positive, Though Expectations Worsen
The business situation has improved for German automotive manufacturers and for their suppliers in particular. The indicator rose to 28.4 points, up from 23.5 points* in April. “However, the data trend indicates that a turning point is coming because the expectations for the months ahead are consistently pessimistic,” says ifo industry expert Anita Wölfl.
Business Expectations in Germany’s Chemical Industry Take a Dip
The ifo Business Climate in Germany’s chemical industry worsened slightly in May. The indicator fell to -11.1 points, down from -3.9 points* in April. Business expectations in particular took a major dip, with that indicator dropping to -4.1 points from +11.4 points in April. The majority of companies once again described their current situation as poor. “The clouds dampening the business climate hang over all the chemical industry’s key customer sectors: the Business Climate Index fell in manufacturing and in construction,” says ifo’s industry expert Anna Wolf.
ifo Business Climate in Saxony Improves Moderately (May 2023)
The ifo Business Climate Index Saxony rose slightly in May. The barometer of business sentiment in Saxony’s economy climbed from 99.0 points in April to 99.6 points in May. The Saxony-based companies surveyed assessed their current business situation as marginally better than in the previous month and raised their business expectations slightly.
Fewer Supply Bottlenecks in German Retail
Supply bottlenecks at German retailers eased in May. In May, 41.3% of the businesses surveyed reported shortages, down from 45.7% in April. “The share of retailers affected by supply problems has been falling steadily since the beginning of the year,” says ifo expert Patrick Höppner. “However, the business situation remains gloomy for many. Fewer consumers are going to shops, and when they do they’re buying less due to inflation,” he adds.
ifo Business Climate Eastern Germany: Index Decreased (May 2023)
Sentiment among eastern German companies cooled a bit in May. The ifo Business Climate Index for the entire regional economy fell to 96.2 points, down from 96.5 points in April. The companies surveyed slightly raised their assessments of the current situation, while their outlook for the next six months worsened noticeably.
