German businesses are experiencing a renewed ability to forecast their future operations, according to a survey released Monday by the Ifo Institute. The survey indicates a decline in economic uncertainty across various sectors.
In June, 20.2% of companies reported difficulties in predicting their business development, a significant decrease from 23.3% in May and 28.3% in April. This metric is widely seen as an indicator of overall economic insecurity, which reached its lowest point since April 2023.
Klaus Wohlrabe, head of Ifo surveys, noted that firms are viewing current political signals positively, contributing to stabilization despite ongoing geopolitical risks, such as unresolved trade disputes.
The decrease in uncertainty is particularly pronounced within the industrial sector, where the proportion of companies struggling with business planning has fallen to 25.8% – down from 31.5% in May. Reduced uncertainty has been observed across almost all industrial branches, with the exception of the chemical industry, where the percentage of companies reporting difficulties rose to 41.4%.
In the retail sector, 27% of businesses reported uncertainty regarding their future business, a figure lower than recent months. Service providers continue to demonstrate lower levels of insecurity, currently at 15.2%. The construction sector is also demonstrating improved planning capabilities, with only 19.3% of companies expressing difficulty in forecasting, a notable shift from the 10 percentage point higher figure recorded at the beginning of the year. The increasing clarity surrounding the federal government’s infrastructure package is likely contributing to this improvement.
Approximately 20% of the survey responses were collected following the renewed escalation between Israel and Iran on June 13th. Immediately afterward, a tendency toward increased uncertainty emerged, particularly within the industrial sector. This geopolitical development is now recognized as a potential factor that could influence whether the current positive trend continues or reverses.