ifo Business Surveys: Further Results

More companies in Germany are planning to raise their prices. The ifo price expectations rose from 23.0* points in September to 25.9 points in October 2026. “Companies are responding to the sharp increase in prices for crude oil and natural gas, which reached their highest level in the second half of October since 2022,” says Timo Wollmershäuser, Head of Forecasts at ifo. “In the coming months, inflation will continue to rise for both producer and consumer prices.”

Sentiment in residential construction in Germany was more pessimistic in September than in August. The business climate fell from -22.5 in August to -25.1 points. Companies are more skeptical above all about business in the coming months, while they rated their current situation as largely unchanged. “The European Central Bank’s rate hike is likely to have dampened confidence in residential construction,” says Klaus Wohlrabe, Head of Surveys at ifo. “The prospect of higher financing costs again is weighing on the industry.”

Material shortages in German manufacturing increased somewhat again in September. A total of 14.6% of companies reported shortages of intermediate products, up from 13.3% in August. “There is still no sign of a broad-based rise in supply bottlenecks in manufacturing. In individual industries, however, shortages of intermediate products are once again becoming a bigger problem,” says Klaus Wohlrabe, Head of Surveys at ifo.

The business climate among the self-employed and microenterprises improved again in September: The “Jimdo-ifo Business Climate Index” rose from -19.7 points in August to -18.8 points. In particular, expectations were less pessimistic, and the assessment of current business was also no longer quite as critical. “It’s still too early to be optimistic, but there are signs of a gradual recovery,” says ifo expert Katrin Demmelhuber. “Among the self-employed, however, there has been only a slow improvement so far.”

The business climate in Germany’s automotive industry has deteriorated sharply. The sector indicator stood at -35.0 points in September, compared with -22.0* points in August. Companies rated their current business situation much worse than in August, and even worse than in June or July, when it hit its lowest level of 2026 so far. Business expectations had already plunged in August and remained at a low level in September. “The automotive industry remains mired in crisis,” says ifo industry expert Anita Wölfl.

The business climate in Germany’s chemical industry improved in September for the second time in a row. The index rose to +5.5 points, up from -2.6* points in August. Companies are once again positive about the business situation, at +8.8 points. Business expectations brightened noticeably, from -15.0* up to +2.3 points. “Customers in Germany and abroad are continuing to build up their inventories and are willing to pay higher prices to do so,” says ifo industry expert Anna Wolf.

The business climate in Germany’s electronics industry* climbed sharply again in September. The index rose to 24.8 points, up from 16.5 points in August. Companies’ assessment of their current business situation improved markedly, from 15.0 to 29.0 points. Expectations also increased. “The electrical equipment industry is increasingly becoming the economic locomotive of German industry,” says ifo expert Klaus Wohlrabe. “While many manufacturing sectors are still struggling with weak demand, business here is already going considerably better.”

In September, somewhat more companies in Germany overall planned to raise their prices. The ifo price expectations rose slightly to 22.7 points, up from 21.4 points* in August. This indicates that the higher energy prices are increasingly being passed on to sales prices. “Fuel and heating oil have already become noticeably more expensive, and energy providers are likely to raise electricity and gas prices this winter. At the same time, the price pressure on many goods and services will continue to increase,” says Timo Wollmershäuser, Head of Forecasts at ifo. “Overall, the inflation rate will climb to over 3% in the coming months.” Crude oil prices have risen sharply again, particularly following the blockade of the Bab al-Mandab Strait. Natural gas and electricity prices also reached their highest levels since the end of 2022 in mid-September.

Half of German companies cite bureaucracy and regulation as the biggest problem facing Germany as a business location. According to the ifo Business Survey, energy costs (27%) and labor costs (22%) lag well behind. “Red tape has a dual impact: It ties up staff who are needed elsewhere, and it hampers investments, since they no longer make financial sense once the costs of approval and documentation are factored in,” says Klaus Wohlrabe, Head of Surveys at ifo. “The second effect is more costly and it doesn’t show up in any statistics because the project never gets off the ground.”

Sentiment in residential construction in Germany improved significantly in August. The business climate rose from -29.0 to -22.7 points. That was due primarily to companies’ expectations: The indicator climbed from -35.6 to -23.3 points. However, the assessment of the current business situation remained unchanged, though it is still characterized by a certain degree of dissatisfaction. “Companies can increasingly see light at the end of the tunnel,” says Klaus Wohlrabe, Head of Surveys at ifo. “The rise in building permits is fueling hopes that the order situation will pick up in the coming months.”

The ifo Business Climate in Germany’s retail sector in August was -29.0 points and so virtually unchanged from July. The recovery that had been observed since May has thus been interrupted. Companies’ assessments of their current situation were worse than in July. However, their business expectations improved slightly – though they remain pessimistic about the rest of the year. “The sentiment among retailers remains very subdued. Many retailers have hardly benefited from the recovery in the economy as a whole so far,” notes ifo industry expert Patrick Höppner.

The business climate for the self-employed and microenterprises in Germany improved for the fourth time in a row in August. The “Jimdo-ifo Business Climate Index for the Self-Employed” rose from -22.6 points in July to -19.7 points in August. “Most recently, the indicator was supported primarily by less pessimistic expectations. This time, however, the self-employed were also less frequently negative in the assessment of their current business,” notes ifo expert Katrin Demmelhuber. “Despite the positive signals, the situation remains challenging.”