The mood in the German economy deteriorated again in October. The Ifo business climate fell only slightly by 0.1 points to 84.3 points compared to the previous month, as the Ifo Institute announced on Tuesday in Munich. Economists had expected a much stronger downturn to an average of 83.5 points. The Ifo business climate index, which is based on a survey of around 9,000 companies, had already fallen in the previous month.
The most important German economic barometer slipped with the current damper to its lowest level since May 2020. During the Corona crisis, however, the indicator had fallen significantly lower at times.
“The mood in the German economy remains gloomy,” commented Ifo President Clemens Fuest. The companies were less satisfied with their current business. Even if the outlook has improved, companies continue to worry about the coming months. “The German economy is facing a difficult winter,” said Fuest, according to the announcement.
The industrial index fell again, mainly due to falling confidence. The order books are still well filled, but the number of new orders has declined. The business climate also continued to deteriorate in the construction industry.
The climate among service providers has recovered after the fall in September, with expectations improving in the first place. The index also rose in retail, where it benefited from a better assessment of the situation. “However, expectations remain extremely bleak, especially in retail,” said Fuest.
“The fact that the Ifo business climate did not actually fall any further in October is not an all-clear,” wrote Jörg Krämer, chief economist at Commerzbank. The barometer is still moving at levels at which the German economy had shrunk in the past. Against this background, he sticks to the forecast that the economy will shrink in the winter half-year.
The German economy is under pressure because of a variety of crises, above all because of Russia’s war against Ukraine. The Ifo business climate has clouded over considerably since the beginning of the war. In addition, inflation, rising interest rates and the energy crisis are creating uncertainty – even if the situation on the gas market has eased somewhat recently. China’s strict zero-Covid strategy also continues to put a strain on supply chains. (dpa)