ifo Media Center
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Business Climate in the German Automotive Industry on the Upswing
The business climate in Germany’s automotive industry brightened in March. The indicator rose to -5.8 points, up from -9.9 points* in February. “The German automotive industry seems to have finally emerged from its economic low in the second half of 2023 and is looking to the future with more confidence,” says Anita Wölfl, a specialist at the ifo Center for Industrial Organization and New Technologies.
Inflation Continues to Decline in Germany
ifo price expectations in Germany fell to 14.3 points in March, down from 15.0 points in February. This is their lowest level since March 2021. “Inflation is still on the decline and should fall below 2% this summer. From a German perspective, there’s no reason why the ECB shouldn’t cut interest rates soon,” says Timo Wollmershäuser, Head of Forecasts at ifo.
ifo Business Survey Trade (2023b)
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ifo Business Survey Service (2023b)
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ifo Business Survey Construction (2023b)
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EBDC Business Investment Panel (2023)
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EBDC Business Expectations Panel (2023)
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ifo Business Survey Industry (2023b)
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Business Climate in German Retail Improves Markedly Before Easter
The ifo Business Climate in retail brightened noticeably in March. The indicator for assessments of the current business situation rose to -7.3 points, up from -18.1 points* in February. There was a clear improvement in business expectations, too. “The pessimism that has been such a feature of recent times is receding. Business in the run-up to Easter has apparently brought a ray of hope for many retailers,” says ifo expert Patrick Höppner.
ifo Business Climate Eastern Germany Blossoms with the Start of Spring (March 2024)
The ifo Business Climate Index Eastern Germany rose considerably in March. The barometer of business sentiment for the regional economy in eastern Germany climbed to 90.0 points, up from 88.6 points in February. The eastern German companies surveyed provided assessments of their business situation that were somewhat better than the previous month, and they also raised their business expectations slightly.
Headwinds from Germany and Abroad: Institutes Revise Forecast Significantly Downwards
According to Germany’s five leading economic research institutes, the country’s economy shows cyclical and structural weaknesses. In their spring report, they revised their GDP forecast for the current year significantly downward to 0.1%. In the recent fall report, the figure was still 1.3%. Expectations for the coming year are almost unchanged at 1.4% (previously 1.5%). However, the level of economic activity will then be over 30 billion euros lower due to the current weak phase.
Eastern Germany Hit Harder by the Skills Shortage
Companies in eastern Germany are more affected by the shortage of skilled workers than in the rest of the country. This is confirmed by new results from the ifo Business Survey of 9,000 companies throughout Germany, 1,700 of which are based in former East Germany. In the first quarter of 2024, 42.1% of companies in eastern Germany stated that their business was affected by a lack of skilled personnel; the figure for Germany as a whole was 36.3%.
ifo Employment Barometer Rises (March 2024)
Companies in Germany are again looking to hire more staff. The ifo Employment Barometer rose to 96.3 points in March, up from 94.9 points in February. “Companies are currently more willing to hire because they are better able to assess the economic conditions. Skilled workers continue to be in demand,” says Klaus Wohlrabe, Head of Surveys at ifo.
Institut ifo : nette progression des prévisions en matière d’exportations
Le moral des exportateurs allemands s'est considérablement amélioré. L’indice ifo des prévisions en matière d’exportations est passé de – 7,0 points en février à – 1,4 point en mars. « Le commerce mondial devrait repartir à la hausse au cours des prochains mois », déclare Klaus Wohlrabe, directeur des enquêtes conjoncturelles de l'Institut ifo. « Les exportateurs allemands espèrent pouvoir en profiter. »
ifo Export Expectations Rise Considerably (March 2024)
Sentiment in the German export industry is markedly brighter. The ifo Export Expectations rose to -1.4 points in March, up from -7.0 points in February. “World trade ought to pick up in the months ahead,” says Klaus Wohlrabe, Head of Surveys at ifo, “and German exporters hope to benefit from this.”
L’indice ifo du climat des affaires à nouveau en hausse
Le moral des entreprises s'est nettement amélioré, comme le montre la progression de l'indice ifo du climat des affaires, de 85,7 points en février à 87,8 points[1] en mars. Les prévisions des entreprises s'avèrent beaucoup moins pessimistes. L'évaluation de la situation actuelle affiche elle aussi une amélioration. Une lueur d'espoir se profile à l’horizon pour l’économie allemande.
ifo Business Climate Index rises (March 2024)
Sentiment in German companies has improved noticeably. The ifo Business Climate Index rose to 87.8 points in March, up from 85.7 points in February. In particular, companies’ expectations turned much less pessimistic. Assessments of the current business situation also improved. The German economy glimpses light on the horizon.
ifo President Fuest: Europe Must Invest in Its Own Strength
Europeans should do more for their own economic strength. This is ifo President Clemens Fuest’s recommendation in view of the elections in Europe and the United States. “If Europe’s security and prosperity depend primarily on the outcome of US presidential elections, then we have made some fundamental mistakes,” he writes in a new ifo Viewpoint. Achieving greater strength should be the central theme of the European elections in June 2024 and the policy of the next European Commission. This includes defending the rules-based international order with partners wherever possible.
Germany’s Shortage of Skilled Workers Eases Slightly
The shortage of skilled workers among companies in Germany has eased somewhat. According to the survey, 36.3% of firms are currently suffering from a shortage of qualified workers, down from 38.7% in October 2023. A year ago, it was 43.6%. “The weakening economy is reducing demand for skilled workers in the short term,” says ifo expert Klaus Wohlrabe, “but the fundamental problem is here to stay.”
Working from Home Could Reduce Office Space Requirements in Germany by 12%
Working from home reduces the need for office space in Germany. This is the result of a new study conducted by the ifo Institute together with real estate consultancy Colliers for the major cities of Berlin, Hamburg, Munich, Cologne, Frankfurt am Main, Stuttgart, and Düsseldorf. “Regular working from home has become the new normal for around 25% of employees and 69% of companies. This is leading to a decline in demand for office space, particularly among large companies and in industries where working from home is more commonplace. By 2030, it’s likely that the need for office space will have decreased by 12%. This would correspond to a drop in demand of around 11.5 million square meters in the seven major cities. The new world of work is triggering structural change in the office market,” says ifo researcher Simon Krause, coauthor of the study.