Many large companies suffer from a lack of orders. This has negative consequences for the order situation among the self-employed – which in turn fuels concerns about future business development.
The self-employed in Germany are increasingly caught up in the economic downturn. The ifo barometer for the business climate fell in June by 4.0 to minus 12.6 points, as the Munich Institute announced in its monthly survey. “It’s a kind of domino effect,” said ifo expert Katrin Demmelhuber. “Since many large companies lack orders, they also award fewer orders to the self-employed.” Concerns about further business development therefore increased again significantly.
The self-employed were also dissatisfied with their current business. “In the overall economy, the indicators are also pointing downwards, but the overall business situation is still considered favourable,” said the ifo Institute.
industrial orders miss
Expectations fell noticeably among service providers, the focus of the survey of self-employed people and micro-enterprises with fewer than nine employees. The current situation was also assessed less positively. Sales fell and orders on hand continued to shrink.
Business-related service providers such as IT or management consultancies then felt the lack of orders from industry. “Many private households are also reluctant to place orders due to continued high inflation,” said Demmelhuber.
The business climate has also clouded over significantly in retail. “The industry assessed the current situation in particular as significantly worse, but companies are also more pessimistic about the future than in the previous month,” the Munich researchers explained.
Germany is in a recession
The ifo survey reflects the current economic situation in Germany: The gross domestic product has recently shrunk for two quarters in a row, which means that the Federal Republic is officially in a recession. At the end of 2022, GDP in Germany fell by 0.5 percent and by 0.3 percent in the first three months of the current year. Many economists also expect the economy to contract slightly for the year as a whole.
In addition, the Chinese economic data recently indicated that China is experiencing economic problems. Experts no longer rule out deflation in the economy, which is so important for export-oriented German industry.
The number of company bankruptcies increases significantly
In the meantime, the economic downturn is also reflected in the number of company bankruptcies. The Halle Institute for Economic Research (IWH) recently reported that a total of 1,050 insolvencies of partnerships and corporations were registered in June. That is 16 percent more than in May and 48 percent more than in June 2022. This is the highest value since June 2016.