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Business climate in the supplier industry: low point at the end of 2024
The ifo Business Climate for the German supplier industry reached a new low in December 2024. With a decline of 3.9 points, the seasonally adjusted value now stands at -36.8 points - the worst value since May 2020, when the coronavirus pandemic had a massive impact on the economy. The strongly negative assessment of both the current business situation and expectations for the coming months is particularly alarming.
Dramatic deterioration in the situation and a gloomy outlook
The assessment of the current business situation fell by 5.0 points to -39.1 balance points in December, while expectations for the next six months fell by 2.7 points to -33.5 balance points. Both values mark the lowest point in 2024. It is particularly worrying that the current situation was assessed much better in the same month of the previous year (-12.5 points), which indicates a rapid deterioration in economic conditions.
German suppliers had hoped for an improvement in the meantime, especially after expectations peaked in June 2024 (-17.9 points). However, these hopes have not been fulfilled. Instead, the combination of structural challenges in the energy industry, massive price fluctuations on the electricity markets and far-reaching structural disruptions in the customer industries are weighing heavily on the supplier industry.
Outlook for 2025
The turbulence on the electricity markets, with price peaks of over EUR 900 per megawatt hour, highlights the problems associated with the energy transition and the competitive disadvantages for German industry. Although the upcoming elections in February 2025 will make it possible to set the political course, structural problems are unlikely to be solved in the short term.
Many companies and employees are facing a difficult start to the year, which will be further burdened by pessimistic expectations. It is clear that the challenges in the supplier industry require urgent political and economic action - even beyond Christmas, which is likely to be characterized by worries for many of those involved.
