Once again, German executives assess the economic climate as worse, even if only minimally. This is the fifth decline in a row and a clear signal of recession.
The mood in the German economy has continued to deteriorate, albeit only minimally: The ifo business climate fell by 0.1 points to 85.7 points in September, for the fifth time in a row, the Munich ifo Institute announced.
Experts had previously expected a sharper decline. The approximately 9,000 managers surveyed were more dissatisfied with current business, but were less skeptical about their prospects than before. “The German economy is stalling,” said Ifo President Clemens Fuest.
“Clear tendency towards recession”
While the survey reading rose in manufacturing and trade, there was the sixth consecutive decline in the services sector. In the construction industry, the business climate indicator even fell to its lowest level since January 2009. Despite the recent increase in orders, the industry is extremely pessimistic about the coming months.
“The mood remains bad, it has become a permanent condition. Hopes for growth will therefore remain buried for the next few months,” commented Alexander Krüger, chief economist at the Hauck Aufhäuser Lamp bank. “The economy is in an environment of stagnation with a clear tendency towards recession. The problem is that drivers for a lasting change in sentiment are currently not apparent. Companies will also raise the question of location even more loudly because of high energy prices.”
At the end of 2022 and the beginning of 2023, Europe’s largest economy shrank for two quarters in a row before stagnating in the spring. Many experts are also expecting a recession for the current year as a whole.