Business sentiment in Germany deteriorates in December
Date
12/17/2024 7:40:47 AM
(MENAFN) Germany’s business sentiment deteriorated in December, according to data from the ifo Institute, which tracks sentiment among companies in various sectors, including manufacturing, services, trade, and construction. The ifo Business Climate Index dropped to 84.7 points, the lowest level since May 2020, signaling growing concerns about the state of the economy. The decline was driven primarily by more pessimistic expectations among businesses, although companies assessed their current situation as slightly better. The institute noted that the weakness of the German Economy has become a chronic issue, contributing to the ongoing decline in business confidence.
The manufacturing sector, in particular, saw a sharp decline in sentiment, with the index falling from minus 22 in November to minus 24.8 in December. Companies in this sector expressed dissatisfaction with the current business environment and low expectations for the future. The continued lack of orders and the announcement of production cuts have added to the sector's challenges, contributing to the overall negative outlook.
In the service sector, the sentiment index fell to minus 5.6 in December, compared to minus 3.5 in the previous month. The decline was largely attributed to “skeptical expectations” and concerns in the transport and logistics sectors, although the catering sector offered a more positive outlook, buoyed by the Christmas season.
The trade sector also experienced a downturn in December, with sentiment dropping to minus 29.5 from minus 26.6 in November. This decline ended a two-month period of improvement and reflected increasing pessimism and dissatisfaction with current business conditions, especially in wholesale trade. Retail businesses also expressed dissatisfaction, further indicating challenges in the broader trade sector.
However, the construction sector showed some signs of improvement, with its business climate index rising slightly from minus 29 in November to minus 26.1 in December. Companies in the construction industry became more positive about their current situation, even though their expectations for the future continued to weaken. Despite the general economic downturn, this modest improvement in construction sentiment offered a small ray of hope amidst the broader business climate challenges in Germany.
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