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11/18/2024
Markets & Industries
Report
Business climate in the German supplier industry: slight increase, but no all-clear
The seasonally adjusted ifo business climate for German suppliers has improved slightly for the first time in five months, rising by 1.4 points. Nevertheless, at -30.2 points, the value remains deep in negative territory, which offers no reason for optimism. Despite the slight increase, the previous month marked the lowest level in the downward spiral that has now lasted three years. The situation remains tense and the outlook gloomy.
Expectations and current situation
Expectations for the next six months have improved slightly, but remain negative at -22.3 points. The majority of suppliers expect business to remain as bad or even worse. The arithmetical balance of expectations is -22.3 points. This is particularly problematic as the assessment of the current business situation remains at the previous month's value of -37.7 points.Only 8 per cent of suppliers rate their current situation as ‘good’, the lowest figure for over 15 years. At the same time, only 6 per cent expect an improvement in the next six months. The report of improved expectations is mainly based on a lower proportion of those who expect the situation to deteriorate further.
Warning signal for the industry
The gloomy mood in the supplier industry should be seen as a warning sign that the transformation is failing. The negative headlines in the industry are piling up and the government is proving incapable of taking action. Small and medium-sized suppliers will not be considered at the Chancellor's upcoming ‘industry summit’, nor can any impetus be expected from the ministers' latest proposals. Comparable crisis moods have only been seen in the early 1990s, during the global financial crisis and at the beginning of the coronavirus pandemic.The situation is perceived as a fundamental turning point in German industrial and economic history. However, given the already very poor assessment of the situation, this is not surprising. Despite the upcoming general election, German suppliers no longer have time for party political games.
