German Business Climate for the Self-Employed Cools Further

The business climate for Germany’s self-employed has deteriorated for the fifth time in a row, finds the latest ifo survey for this segment (“Jimdo-ifo Business Climate Index for the Self-Employed”). The index fell to minus 19.9 points* in August, down from minus 16.4 points* in July. “The situation in the German economy is tense,” says ifo expert Katrin Demmelhuber. “For the self-employed, the risk of entering a downward spiral is increasing.”

Dissatisfaction with the current business situation in particular increased considerably. Expectations remain pessimistic. Fewer and fewer self-employed are planning to raise their prices in the coming months.

Among service providers, the climate indicator slipped below zero for the first time in 2023. The business outlook and sales expectations darkened, and assessments of the current situation deteriorated. “The lean period due to the lack of demand is lingering on,” Demmelhuber adds. While the situation in the hospitality industry recovered slightly in August, there were significant declines among freelancers in the design, photography, and translation industries.

Retailers are pessimistic about their future, and their current business situation deteriorated significantly. “Many businesses continue to feel consumer restraint due to high inflation,” Demmelhuber says.

The ifo Institute has been publishing the Jimdo-ifo Business Climate Index for the Self-Employed since August 2021. This includes both solo self-employed people and microenterprises (with fewer than nine employees). As in the composite index, all sectors of the economy are taken into account. However, its main focus is the service sector. The index is based on a collaboration with Jimdo, a provider of online tools specially geared toward the solo self-employed and small businesses, and aims to improve the visibility of microenterprises. In addition to Jimdo, VGSD e.V. – Germany’s association of founders and self-employed people – is also helping to attract new participants.

*(not seasonally adjusted)