Survey Results

Sentiment among companies in Germany remains unchanged. The ifo Business Climate Index in May stayed at 89.3 points. Companies were less satisfied with their current business situation, but expectations brightened. The manufacturing, trade, and construction sectors are recovering, although the service sector took a slight hit. Germany’s economy is working its way out of the crisis step by step.

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.

The ifo Business Climate in Saxony cooled slightly in May. The barometer of business sentiment in Saxony’s economy fell from 95.6 points to 95.0 points. Although the companies surveyed assessed their business situation as significantly worse than in the previous month, they once again raised their business expectations slightly.

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.”

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.”

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.

The German economy is stumbling. For 2024, the European Commission (2023), IMF (2024), and OECD (2024) each forecast that Germany will be one of the laggards in terms of economic growth compared to other developed economies. The results of the Economic Experts Survey (EES) from fall 2023 show that Germany has become substantially less attractive as a business location over the past ten years. Politicians are alarmed. On April 22, 2024, the executive committee of the FDP adopted a position paper on accelerating the economic turnaround. In the 46th ifo and FAZ Economists Panel, we take this situation as an opportunity to ask German economics professors in which areas Germany is weak and which reforms are necessary. The survey, in which 180 people took part, was conducted from April 16 to April 23, 2024.

As the growth expectations of many experts in the Economic Experts Survey for 2024 are below average, the question arises as to how high the probability of a recession is in the respective countries. The growth forecasts did not include a confidence interval, so it could be that many experts expect significantly lower growth rates in their countries in the most pessimistic scenario. Furthermore, even if growth rates are positive for the year as a whole, a country could experience a technical recession during the year (two consecutive quarters with growth rates below 0%). To assess the likelihood of such scenarios, we asked the experts in the Economic Experts Survey about the probability of a recession occurring in their country by the end of 2024.

What does HR planning look like in companies? This question was the focus of the Randstad-ifo Personnel Manager Survey in the fourth quarter of 2023. The answer is difficult: in addition to the current gloomy economic outlook, a number of other economic and political issues are currently posing a considerable challenge for companies, not least the shortage of applicants and skilled workers, which companies are increasingly feeling and which is having the greatest impact on HR strategy.

How do the Germans grade the schools in their federal state? Where do they see serious problems in the school system? And what solutions do they prefer - for example, for teacher shortage? The ifo Education Survey 2023 examines these and other questions.