August 30, 2022

Sentiment in German business has cooled significantly. The ifo Business Climate Index fell to 88.6 points in July, down from 92.2 points (seasonally adjusted) in June, to reach its lowest value since June 2020. Companies are expecting business to become much more difficult in the coming months. They were also less satisfied with their current situation. Higher energy prices and the threat of a gas shortage are weighing on the economy. Germany is on the cusp of a recession.

In manufacturing, the index plummeted. Pessimism regarding the coming months reached its highest level since April 2020. This pessimism extends across almost all industries. Companies also assessed their current situation as worse. For the first time in two years, new orders fell slightly.

In the service sector, the business climate worsened substantially. The collapse was particularly pronounced in companies’ expectations. The mood turned even in tourism and hospitality, despite great recent optimism here. Service providers assessed their current business as worse, but the indicator remains at a high level.

In trade, the indicator once again took a nosedive. Businesses were less satisfied with their current situation. They are also increasingly concerned about the coming months. At the present time, not a single retail segment is optimistic about the future.

Following a brief recovery in the previous month, the business climate in construction again deteriorated notably. Assessments of the current situation fell to their lowest level since April 2016. Expectations, too, are marked by deep pessimism.

Source: ifo Institute
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither Karen Audit nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.