German business mood worsens further. The Ifo Business Climate Index of the ifo Institute for Economic Research fell seasonally adjusted to 84.7 points in December, after 85.6 points in November. This is the lowest value since May 2020.
The decline was primarily due to more pessimistic expectations, according to the economists. The current situation, on the other hand, was evaluated more positively by the companies. The weakness of the German economy has thus become chronic, according to the ifo Institute.
In the manufacturing sector, the index has clearly fallen. The companies were less satisfied with their ongoing business and their expectations darkened significantly. The order situation deteriorated again, and production cuts are announced.
Even in the service sector, the business climate has deteriorated. This was due to more skeptical expectations of the companies. The current situation, however, was evaluated a bit better. While the catering industry reported a good Christmas business, the transport and logistics sector is looking anxiously at the coming months.
In retail, the index was unable to continue the upward trend of the last two months. The companies were less satisfied with their ongoing business, and pessimism increased in their expectations. This development was primarily driven by the wholesale trade. But even the retail trade shows a less satisfied attitude.
In the construction industry, the business climate has improved. The companies evaluated their current situation in particular as a bit more positive. Their expectations, however, deteriorated.
The Ifo Business Climate Index is considered an important leading indicator for the economic development in Germany. It is based on around 9,000 monthly reports from companies in the manufacturing, service, retail, and construction sectors. The companies are asked to evaluate their current business situation and report their expectations for the next six months.