German businesses lowered their business expectations in November

The ifo Institute's business climate index fell to 88.1 points

The business sentiment of German companies has deteriorated – the ifo Institute’s business climate index fell to 88.1 points in November from 88.4 points in October due to more pessimistic expectations. This is stated in the ifo report.

On the other hand, companies assessed their current situation as somewhat more positive. However, they have little faith that recovery will come anytime soon.

In particular, the expectations index in manufacturing declined. Companies are more skeptical about the coming months and also reported lower order books. However, current business conditions were slightly better.

According to Handelsblatt, sentiment in the export sector suffered another decline in November. The export expectations index fell to minus 3.4 points from plus 2.2 points in October. In particular, optimism has disappeared in the automotive industry, as well as in the food and metallurgical industries. On the other hand, electrical equipment manufacturers, for example, are optimistic: they expect their foreign sales to increase.

According to Klaus Wohlrabe, head of the Ifo survey department, Germany was able to emerge from crises in the past with the help of exports, but this is no longer possible. He noted that the country’s economic model is under significant structural pressure. For example, China is increasingly producing goods that were previously supplied from Germany. Trade with the US is also poor due to the high tariffs imposed by the Trump administration on goods from the EU.

Recall that according to the Bundesbank’s expectations, the German economy is likely to show moderate growth in the fourth quarter. Exports and industry may stabilize in October-December, and the Central Bank also expects positive dynamics from the service sector.