ifo Institute: Earnings Situation in German Industry Still Poor
The earnings situation in German industry is improving only slowly. This is a finding from the ifo Institute’s latest Business Survey. In September the indicator stood at minus 32 points – only a slight improvement over minus 43 in May. “The coronavirus crisis is still having a direct impact on industrial companies’ earnings,” says ifo expert Simon Litsche. Even prior to Covid-19, the industrial recession had caused the indicator to fall to minus 7 points in September 2019, after measuring plus 1 point in May 2019.
In the clothing industry, the situation in fact darkened further in September, with the indicator falling to minus 94 points from minus 86 points in May. Earnings have collapsed in the pharmaceutical industry: the indicator plummeted to minus 7 points from plus 44 points in May. In the chemical industry, the indicator remains negative at minus 28 points.
In metal production and processing, the index rose only marginally to minus 79 points from minus 81 points in May. The situation in the automotive industry, while still poor, has improved somewhat. The indicator rose to minus 69 points from minus 82 points in May. For manufacturers of machinery and equipment, the indicator rose to minus 29 points from minus 48 points in May. In the electrical and electronics industry, the talk is of improvement from a low base. The indicator rose to minus 25 points from minus 42 points in May.
In contrast, assessments of the earnings situation are once again more positive in the food industry, where the indicator rose from minus 6 points in May to plus 11 points in September.
In May and September of each year, the ifo Institute’s monthly Business Survey asks companies in the manufacturing sector about their current earnings situation. The balance value is calculated based on the responses “good” and “poor.”
