ifo Media Center
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Business Climate for Germany’s Self-Employed Brightens
The business climate for Germany’s self-employed has brightened considerably, finds the latest ifo survey for this segment (“Jimdo-ifo Business Climate Index for the Self-Employed”). In September, the index rose to -14.4 points*, up from -19.9 points* in August. “The country’s self-employed appear to be recovering from their economic low point,” explains ifo expert Katrin Demmelhuber. “Whether this improvement will last will become clear over the next few months.”
Material Shortages Ease Somewhat in German Manufacturing
Supply problems in German manufacturing continue to ease. In September, 24.0% of the companies surveyed reported material shortages, down from 24.4% in August. “Things are settling down,” says Klaus Wohlrabe, Head of Surveys at ifo. The situation remains most problematic in the automotive industry, where just under 53% of the companies reported bottlenecks in the supply of raw materials and intermediate products.
Business Situation in German Retail Deteriorates Slightly
The business situation among German retailers has deteriorated somewhat. The indicator fell from -7.2* points in August to -9.8 points in September. Expectations for the coming months, however, improved a little. “The recent noticeable increases in incomes among many consumers should further strengthen purchasing power, and retailers stand to benefit from this, too,” says ifo expert Patrick Höppner.
Business Climate in Germany’s Chemical Industry Worsens Slightly
The ifo Business Climate in Germany’s chemical industry deteriorated somewhat in September to -19.3 points, down from -16.3 points* in August. While assessments of the business situation remain virtually unchanged, business expectations are now gloomier. “The chemical industry faces a great many challenges,” says industry expert Anna Wolf of the ifo Institute.
Mid-term Review of the German Federal Governments’ Economic Policy
The German government’s legislative period is half over, and the country’s economy is weakening. Not only is it being hit by external factors such as the Russian war of aggression, but it is also facing major structural challenges. The 44th ifo and FAZ Economists Panel took this as an opportunity to look at the general economic policy of the German federal government as well as specific economic policies. A total of 205 economics professors took part in the survey, which ran from September 19 to September 26, 2023.
Most German Companies Holding On to Office Space Even with Remote Working
Most companies in Germany don’t want to downsize their offices despite allowing employees to work from home. “The overwhelming majority of companies are leaving their office space as is. Only 9.1% of all companies plan to downsize their offices because of remote working. In individual industries, however, the figure is significantly higher – up to 40% in some cases,” says ifo expert Simon Krause. “So working from home is leading to a slight decline in demand for office space, putting pressure on the real estate market.”
Business Climate in the German Automotive Industry Brightens
The business climate in Germany’s automotive industry has improved slightly. In September, the indicator rose to -14.7 points, up from -18.1 points* in August. “German automakers and their suppliers are satisfied with their current situation, but their expectations are still at rock bottom,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies.
ifo Business Climate Saxony Cools Down Further (September 2023)
The business climate in Saxony deteriorated significantly in September. The barometer of business sentiment in Saxony’s economy fell from 90.7 points in August to 88.0 points. This is its fourth consecutive fall. The Saxony-based companies surveyed reported a noticeable deterioration in their business situation and are much more pessimistic about the future overall.
More Companies in Germany Want to Raise Prices
Slightly more companies in Germany are planning to raise their prices. After twelve consecutive declines, price expectations went up again in September from 14.7 points* to 15.8 points. “It will be some time before Germany achieves the European Central Bank’s 2% inflation target,” says Timo Wollmershäuser, Head of Forecasts at ifo. Price expectations rose particularly sharply in hospitality, from 49.1 points* to 62.8 points. Among retailers, however, the balance dropped from 33.6 points* to 31.4 points.
ifo Business Climate Eastern Germany Cools Again Slightly (September 2023)
The ifo Business Climate Index Eastern Germany saw a small decline in September. The barometer of business sentiment for the entire regional economy slipped to 89.6 points, down from 90.4 points in August. The eastern German companies surveyed reported slightly worse business than in the previous month and lowered their expectations somewhat for the months ahead.
Joint Economic Forecast Autumn 2023: Purchasing power returns ‒ political uncertainty high
The Joint Economic Forecast Project Group forecasts a 0.6% decline in Germany’s gross domestic product for 2023. For 2024, the forecast is 1.3%. The inflation rate is expected to be 6.1% in 2023 and to fall to 2.6% in 2024.
ifo Employment Barometer in Germany Falls (September 2023)
The willingness among companies in Germany to hire new staff has taken a knock. The ifo Employment Barometer fell to 95.8 points in September, down from 97.0 points in August. This is its lowest level since February 2021. “The robust expansion of employment seen over the past few months has come to a standstill,” says Klaus Wohlrabe, Head of Surveys at ifo. “Due to a lack of orders, companies are being rather cautious about filling vacant positions.”
Germany’s Export Expectations Drop Considerably (September 2023)
Sentiment in the German export industry is markedly worse. The ifo Export Expectations fell to -11.3 points in September, down from -6.5 points in August. “Germany’s export economy is going through a weak phase,” says Klaus Wohlrabe, Head of Surveys at ifo. “Exports to all key regions are currently in decline.”
ifo Business Climate Index Falls Slightly (September 2023)
Sentiment in the German economy remains bleak. The ifo Business Climate Index fell to 85.7 points in September, down from 85.8 points (seasonally adjusted) in August. Once again, companies were less satisfied with their current business situation. However, their pessimism regarding the coming months dissipated slightly. The German economy is treading water.
Business Situation in German Retail Deteriorates
Companies in most retail segments in Germany assess their business situation as worse. “Expectations for the coming months also remain cautious. The further cooling of the economy is having an impact on retailers, who have also recently had to cope with weakening consumer demand,” says ifo expert Patrick Höppner.
ChatGPT, Chatbots, and More – How Is Artificial Intelligence Being Used in Corporate HR Departments? (3rd Quarter 2023)
In the third quarter of 2023, the Randstad ifo Personnel Manager Survey focused on the use of artificial intelligence (AI) at German companies and in their HR departments in particular. Currently, about 5% of the companies surveyed are using AI in HR, with another 25% planning to do so.
German Business Climate for the Self-Employed Cools Further
The business climate for Germany’s self-employed has deteriorated for the fifth time in a row, finds the latest ifo survey for this segment (“Jimdo-ifo Business Climate Index for the Self-Employed”). The index fell to -19.9 points in August, down from -16.4 points in July. “The situation in the German economy is tense,” says ifo expert Katrin Demmelhuber. “For the self-employed, the risk of entering a downward spiral is increasing.”
Number of Short-Time Workers in Germany Drops Despite Slowdown
The number of short-time workers in Germany has fallen despite the economic slowdown. In August, 110,000 people were on short-time work, down from 150,000* in May, according to estimates by the ifo Institute based on the ifo Business Survey and figures from the German Federal Employment Agency. “Germany’s weak economy has had little effect so far. One reason for this may be that the regulations facilitating access to short-time allowances expired at the end of June,” says ifo labor market researcher Sebastian Link. As a share of the workforce, the figure fell from 0.4 to 0.3%.
Wave of Cancellations in German Residential Construction Reaches New High
The crisis in the German residential construction sector continues to intensify. In August, 20.7% of companies reported canceled projects, up from 18.9% in the previous month. This is a finding of surveys by the ifo Institute. “Residential construction cancellations are piling up to a new high. We haven’t seen anything comparable to this since the survey began in 1991. The uncertainty in the market is huge,” says Klaus Wohlrabe, Head of Surveys at ifo.
Material Shortages in German Manufacturing Ease Again
German manufacturing is seeing fewer material shortages. In August, 24.4 percent of the companies surveyed reported shortages, down from 29.5 percent in July. This is a finding from the ifo Institute’s latest survey. “The situation is trending more and more toward pre-crisis levels,” says Klaus Wohlrabe, Head of Surveys at ifo. “Business problems are now shifting from the supply side to the demand side.”
