Sentiment among German managers extraordinarily dire

ifo Business Climate Index Collapses

In a statement issued on Wednesday, Clemens Fuest, President of the Munich-based ifo Institute, underlined that sentiment among German managers has become extraordinarily dire. He pointed out that the ifo Business Climate Index collapsed from 96.0 points (seasonally adjusted) in February to 86.1 points in March.

As Clemens Fuest underlined this is “the steepest fall ever recorded since German reunification and the lowest value since July 2009”. Companies’ expectations in particular have darkened as never before. Assessments of the current situation have also worsened considerably. The German economy is in shock.

Since its preliminary publication on March 19, when it stood at 87.7 points, the Business Climate Index has fallen by a further 1.6 points. Assessments of the current situation have fallen since then by 0.8 points and expectations by 2.3 points, ifo President explained.

In manufacturing, the index fell to its lowest level since August 2009. Never in the history of a reunified Germany has it fallen so far. The drop in expectations is the single most precipitous in 70 years of industry surveys. The fall in the indicator of the current situation was less pronounced. The index fell across all branches of industry, in some cases considerably and many companies have announced plans to curtail production.

In the service sector, the business climate indicator saw the greatest fall since this data was first recorded in 2005. This applies both to the assessment of the current situation and to expectations.

In trade, the business climate indicator collapsed. Expectations tumbled to their lowest level since German reunification. Companies also revised their assessment of the current situation markedly downward. This development was equally negative across wholesale and retail. Food retailers and drugstores were positive exceptions.

In construction, the index fell comparatively moderately. Companies are still very satisfied with their current situation. However, the outlook has worsened notably.


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