The business climate in Germany’s automotive industry deteriorated slightly in February after a noticeable brightening in January, according to the ifo Business Survey. “However, with a value of -10.1 points, the industry index is still well above where it was when it bottomed out in 2023,” says Anita Wölfl, a specialist at the ifo Center for Industrial Organization and New Technologies.
Le moral des constructeurs automobiles allemands s’est légèrement détérioré en février, après une amélioration sensible en janvier. C’est ce que révèlent les enquêtes conjoncturelles réalisées par l’Institut ifo. « À – 10,1 points, l’indice du secteur reste toutefois nettement supérieur à son point le plus bas enregistré en 2023 », indique Anita Wölfl, chercheuse au Centre ifo de l’organisation industrielle et des technologies nouvelles.
Material shortages in German manufacturing have become slightly worse. In February, 14.6% of the companies surveyed reported shortages, up from 12.5% in January. These are findings from the ifo Institute’s latest survey. “In addition to the ongoing conflict in the Red Sea, the rail strike in Germany has also led to a shortage of raw materials and intermediate products at some companies,” says Klaus Wohlrabe, Head of Surveys at ifo. “Nevertheless, the supply bottlenecks are not a fundamental problem for industrial production. At present, we’re mainly seeing delays within supply chains, not a total breakdown.”
The ifo Business Climate Index Eastern Germany saw a small decline in February. The barometer of business sentiment for the regional economy in eastern Germany fell from 89.0 points in January to 88.5 points in February. The eastern German companies surveyed provided assessments of their business situation that were somewhat worse than the previous month and also lowered their business expectations slightly.
Fewer companies in Germany are looking to raise their prices. In February, the ifo price expectations slipped to 15.0 points, down from 18.8 points* in January. This was mainly due to the consumer-related sectors, where price expectations fell from 32.4 points* to 28.9 points. “This suggests that in the coming months, inflation will continue to decline,” says Timo Wollmershäuser, Head of Forecasts at ifo.
Companies in Germany are looking to hire less staff. In February, the ifo Employment Barometer fell to 94.9 points, down from 95.5 points in January. “With the economy so sluggish, companies are putting off hiring new people,” says Klaus Wohlrabe, Head of Surveys at ifo. “Even layoffs can no longer be ruled out.”
Sentiment in the German export industry has brightened somewhat. The ifo Export Expectations rose to -7.0 points in February, up from -8.5 points in January. “The German export economy is hardly benefiting at all from current global economic developments,” says Klaus Wohlrabe, Head of Surveys at ifo. “There’s still a lot of room for improvement.”
Le moral des exportateurs allemands s’est légèrement amélioré. L’indice ifo des prévisions en matière d’exportations est passé de – 8,5 points en janvier à – 7,0 points en février. « Actuellement, les entreprises exportatrices allemandes ne profitent quasiment pas de la conjoncture économique mondiale », estime Klaus Wohlrabe, directeur des enquêtes de l’Institut ifo. « Il y a encore un large potentiel à exploiter. »
Le moral des dirigeants allemands s’est légèrement amélioré, l’indice ifo du climat des affaires étant passé à 85,5 points, contre 85,2 points en janvier. Cette embellie est due à des attentes un peu moins pessimistes alors que l’évaluation de la situation actuelle reste inchangée. Dans ce domaine, le nombre de réponses positives et négatives est à peu près le même. La conjoncture se stabilise à un faible niveau.
Sentiment among German companies has brightened somewhat. The ifo Business Climate Index rose to 85.5 points in February, up from 85.2 points in January. This is due to slightly less pessimistic expectations. Assessments of the current situation remained unchanged – positive and negative responses here were nearly in balance. The German economy is stabilizing at a low level.
The business climate in the German chemical industry stagnated at a low level in January. The value slipped to -15.9 points, down from -15.4 points* in December. Companies rated their current business situation at -17.1 points, which is slightly worse than in the previous month. At -14.6 points, the level of pessimism in their business expectations remained virtually unchanged. “Germany’s chemical industry is still very much in crisis,” says industry expert Anna Wolf of the ifo Institute.
Russia is circumventing sanctions to obtain Western goods primarily via the CIS countries in Central Asia and Turkey, according to a study by the ifo Institute on trade data for sanctioned goods. The study examined goods that are critical to the Russian economy or important for the military industry, such as vehicles and ball and roller bearings. “In 2022, exports to Russia from Armenia, Kazakhstan, Uzbekistan, Kyrgyzstan, and Turkey of goods critical to the Russian economy or important for the military industry were 50 times higher than those countries’ exports of general goods to all destination countries in 2019. This indicates a very high probability of sanctions evasion,” says Feodora Teti, Deputy Director of the ifo Center for International Economics.
By 2026, Europe will have finished building only about 1.5 million housing units (down 13% on 2023). For Germany, that means an expected decline of 35%. This is evident from projections by the EUROCONSTRUCT forecasting network, of which the ifo Institute is a member. “Due in particular to the sharp rise in construction and financing costs, it’s often no longer possible to build new homes in Germany. Politicians haven’t yet made a decisive improvement to the policy framework,” says ifo construction expert Ludwig Dorffmeister. “The resulting decline in the number of permits doesn’t bode well for the coming years.”
Many of Germany’s self-employed reported that their order intake in January was too low. The proportion of those with this complaint increased to 47.9% at the start of the year, up from 45.3% in October. This is a finding from the latest ifo survey for this segment (“Jimdo-ifo Business Climate Index for the Self-Employed”). “The order books of the self-employed are plainly melting away,” says ifo expert Katrin Demmelhuber, “and the resulting decline in sales is a cause for concern.”
President of the ifo Institute Clemens Fuest advocates greater strategic independence for the EU. “Since Germany’s and Europe’s prosperity is based firmly on international trade, it is particularly important here to develop the right geoeconomic strategy for potential crises,” he said at the Munich Security Conference. “To reduce risks, it makes sense to diversify raw material and energy supplies, secure critical physical and digital infrastructure, and increase warehousing or maintain in-house production capacity for highly critical goods such as certain medical products.”
Attractive politicians are absent from parliament more often and are less involved in parliamentary work, according to a recent study by the ifo Institute. “Our results show that more attractive members of parliament have more opportunities for alternative activities – and that they make consistent use of them. For example, they have higher outside earnings and appear more often on talk shows,” says ifo researcher Timo Wochner.
Investitionen in qualifizierte und moderne Arbeitsplätze erhöhen die Produktivität von Unternehmen in Ostdeutschland. „In den Fokus staatlicher Förderung sollte das Vermitteln relevanter Qualifikationen, besserer technischer Ausstattung der Arbeitsplätze und Entwicklung und Einsatz arbeitssparender Technologien kommen“, sagt Joachim Ragnitz von der Niederlassung Dresden des ifo Instituts in einem Aufsatz der aktuellen Ausgabe von „ifo Dresden berichtet“. So kann insbesondere für Ostdeutschland der notwendige Strukturwandel beschleunigt werden.
ifo President Clemens Fuest and Niklas Potrafke, Director of the ifo Center for Public Finance, argue that the German debt brake should be retained without reforms. The economists present their reasoning in a recent article for ifo Schnelldienst. “It forces politicians to set priorities. At the same time, it gives the government sufficient leeway to take on debt in cases where it makes economic sense,” Fuest says. The current regulations also include the possibility of special cases for taking on debt, as for the German Armed Forces. Requiring a two-thirds majority in a Bundestag vote is appropriate in such instances.
The business climate in German residential construction has fallen from -56.9 points to -59.0 points – the lowest value ever measured. The same is true for business expectations, which have sunk even further, dropping from -64.7 points to -68.9 points. “The outlook for the coming months is bleak,” says Klaus Wohlrabe, Head of Surveys at ifo. “Residential construction is still facing the double whammy of a lack of new orders and ongoing project cancellations.”