ifo Media Center
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ifo Price Expectations Rise Slightly
The ifo price expectations rose a little to 16.2 points in May, up from 15.2 points* in April. In manufacturing and wholesale in particular, slightly more companies plan to raise their prices than in the previous month. In consumer-related industries, by contrast, price expectations declined. “This means inflation is likely to fall again in the coming months. In August, it should drop below 2 percent for the first time since March 2021,” says Timo Wollmershäuser, Head of Forecasts at ifo.
ifo Business Climate Eastern Germany Rises Further (May 2024)
The ifo Business Climate Index for Eastern Germany rose slightly in May. The barometer of business sentiment for the regional economy in eastern Germany climbed to 92.8 points, up from 92.2 points in April. The eastern German companies surveyed provided assessments of their business situation that were somewhat better than the previous month, and they raised their business expectations slightly. The upward trend continues.
ifo Employment Barometer Rises (May 2024)
The willingness among companies in Germany to hire new staff has increased slightly. The ifo Employment Barometer rose to 96.3 points in May, up from 96.0 points in April. “Demand for workers remains rather weak,” says Klaus Wohlrabe, Head of Surveys at ifo. “Those companies that are experiencing a lack of orders are also thinking about cutting jobs.”
German Export Expectations Rise (May 2024)
Sentiment in the German export industry has turned brighter. The ifo Export Expectations rose from minus 1.5 in April to plus 0.3 points in May. “Positive and negative responses are in nearly perfect balance,” says Klaus Wohlrabe, Head of Surveys at ifo. “The export economy is not yet developing any great momentum overall.”
ifoCAST
ifoCAST generates forecasts of current German GDP with the help of a statistical model that works with historical correlations. These forecasts do not necessarily have to correspond to the published ifo Economic Forecasts, which also take expert knowledge into account.
ifo Business Climate Index remains unchanged (May 2024)
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.
German Manufacturing Sees Threat to Its Competitiveness
The competitiveness of German manufacturing within the EU and on global markets has been deteriorating for two years. This is based on analyses of the monthly ifo survey. Companies have reported falling behind in terms of competitiveness within the EU since the third quarter of 2022. The situation is similar on the global markets (outside the EU), where this trend had begun in the first quarter of 2022. “It’s becoming more difficult for German manufacturers to compete,” says Klaus Wohlrabe, Head of Surveys at ifo.
Business Climate of the Self-Employed in Germany improved somewhat
The business climate for solo self-employed and microenterprises in Germany improved somewhat in April. The “Jimdo-ifo Business Climate Index for the Self-Employed” rose to -13.8 points*, up from -15.6 points* in March. Dissatisfaction with current business has decreased slightly, as has skepticism regarding expectations for the next six months. The signal coming from service providers is particularly positive. Here, order backlogs are slowly stabilizing. “The self-employed are hoping that the order situation will ease,” ifo Expert Katrin Demmelhuber says.
Business Climate in Germany’s Chemical Industry Improved
The business climate in Germany’s chemical industry improved in April. The index rose to -6.0 points, up from -10.1 points* in March. Companies assessed their current business situation at -16.0 points, which is slightly better than in March (-18 points*). Business expectations have brightened considerably – the indicator rose to +4.6 points in April, up from -1.9 points* in March. “The chemical industry is somewhat more confident about the coming months,” says industry expert Anna Wolf from the ifo Institute.
Half of Germany’s Residential Construction Companies Are Short on Orders
Residential construction in Germany is experiencing an order shortage. More than half the companies (55.2%) in this industry reported a lack of orders in April. In March, the figure was 56.2%. “Housebuilders are looking for signs of hope,” says Klaus Wohlrabe, Head of Surveys at ifo, “but there’s no end to the crisis in sight.”
Lack of Orders Slows Down the German Economy
The order shortage in Germany has worsened and is an obstacle to the economy. In April, 39.5% of manufacturing companies reported a lack of orders, up from 36.9% in January. In the service sector, the proportion rose from 32.1% to 32.4%. “The lack of orders is hampering economic development in Germany,” says Klaus Wohlrabe, Head of Surveys at ifo. “Almost all industries are affected.”
ifo Expert Survey: Negative Effects in Northern and Eastern Europe Due to War in Ukraine
Economic experts in Northern and Eastern Europe are seeing the negative impact of the war in Ukraine on the political and economic situation in their countries particularly clearly. This is a finding of the Economic Experts Survey (EES) conducted by the ifo Institute and the Swiss Economic Policy Institute (IWP). “Since the outbreak of the war, respondents who mention the keywords ‘Russia,’ ‘Ukraine,’ ‘NATO’ or ‘War’ in their answers have a much more negative view of their country’s political and economic situation than the others,” says ifo researcher Tuuli Tähtinen.
ifo Business Climate Saxony: Climate Brightens Considerably (April 2024)
The ifo Business Climate in Saxony brightened considerably in April. The barometer of business sentiment in Saxony’s economy leapt from 91.8 to 95.5 points. The companies surveyed raised their assessments of the business situation enormously. Their business expectations also improved substantially compared to the previous month. Business in Saxony is much better again.
Prospects for Germany as a Business Location – Reform Proposals from Economists
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.
Sentiment in the German Automotive Industry Improves
The business climate in Germany’s automotive industry brightened again in April. The index rose to -1.5 points, up from -5.3 points* in March. “Companies in Germany’s automotive industry rate their current business situation as slightly better, but more importantly, their outlook once again turned much less pessimistic than in March,” says Anita Wölfl, a specialist at the ifo Center for Industrial Organization and New Technologies.
ifo Business Climate Eastern Germany Rises a Second Time in a Row (April 2024)
The ifo Business Climate Index Eastern Germany rose considerably in April. The barometer of business sentiment for the regional economy in eastern Germany climbed to 92.3 points, up from 90.2 points in March. The eastern German companies surveyed provided assessments of their business situation that were somewhat better than the previous month, and they raised their business expectations substantially. The Business Climate Index has now risen for the second time in succession. Signs indicate an upward trend.
Business Climate in German Retail Improves Again
The ifo Business Climate in retail brightened further in April. The index rose to -14.5 points, up from -17.5 points in March. Assessments of the current business situation improved significantly. Retailers’ business expectations also became somewhat more optimistic, but remain largely cautious. “Consumer-related businesses are likely to support the overall economy in 2024,” says ifo expert Patrick Höppner.
ifo Price Expectations Rise Slightly
In Germany, slightly more companies than in the previous month intend to raise their prices in April. The ifo price expectations rose a little to 15.1 points in April, up from 14.3 points in March. “Inflation is unlikely to fall any further in the coming months and is set to remain at just over 2%,” says Sascha Möhrle, economic expert at the ifo Institute.
ifo Employment Barometer Falls (April 2024)
Companies in Germany are proving more cautious in their personnel planning. The ifo Employment Barometer slipped to 96.0 points in April, down from 96.3 points in March. “A lack of orders is causing some companies to put the brakes on hiring,” says Klaus Wohlrabe, Head of Surveys at ifo. “But service providers in some industries, such as data processing and tourism, are taking people on.”
German Export Expectations Fall (April 2024)
Sentiment in the German export industry has clouded over a little. The ifo Export Expectations fell to -2.0 points in April, down from -1.2 points in March. “The mood is somewhat subdued,” says Klaus Wohlrabe, Head of Surveys at ifo. “The export economy lacks momentum at present. While the global economy offers many good prospects for growth, these aren’t yet being reflected in additional orders.”
