dpa
Berlin
A flurry of economic forecasts and business surveys released on Thursday all painted a grim picture of Germany’s sputtering economy, suggesting a further downturn in the labour market might be ahead.
Germany’s industrial, manufacturing and service sectors continued to weaken in the final quarter of 2024, according to the latest economic barometer from the German Institute for Economic Research (DIW) released on Thursday, which found that overall German economic output also likely declined during the quarter. Surveys of about 9,500 German companies by the Munich-based ifo Institute, meanwhile, found fewer German companies are looking to hire staff and more are contemplating lay-offs.
The ifo Institute’s monthly employment barometer, which is based on the results of the surveys, hit its lowest mark since the depths of the coronavirus pandemic in 2020. However, unlike at the beginning of the pandemic, this year’s decline is not a sudden crash, but an almost continuous decline.
“Fewer and fewer companies are hiring new staff,” said ifo survey director Klaus Wohlrabe. “But the proportion of companies that want to cut jobs is increasing.” Declining global demand for German exports, persistently high energy prices, labour costs and poor economic policy conditions have been frequently cited by companies and business lobby groups for the poor state of Europe’s largest economy.
Political uncertainties following the re-election of Donald Trump as US president, who has threatened new tariffs, are also continuing to dampen the mood among companies, according to the DIW’s report.
“In particular, the future trade policy of the United States is difficult to predict,” said DIW economic analyst Geraldine Dany-Knedlik.
But new consumer surveys also suggest that private consumption will not be a major driving force for a recovery next year after a rather mixed Christmas season so far, according to a report also released on Thursday by the German market research groups GfK and NIM.
“A sustained recovery in the consumer climate is still not in sight, as the uncertainty among consumers is still too great,” said consumer expert Rolf Bürkl while presenting the results of the monthly consumer climate study by the two Nuremberg-based firms.
A grim silver lining of sorts is that the downturn on the labour market means German companies are now complaining less about a chronic shortage of qualified workers.
That was the finding of another new survey on Thursday, this time from the German Chamber of Industry and Commerce (DIHK).
The business lobby group’s survey of roughly 23,000 firms found that 43% are currently unable to fill vacancies at least partly because they cannot find suitable employees and skilled workers.
That marks a significant decrease of seven percentage points compared to last year, and a drop of 10 percentage points compared to 2022.
Skilled worker shortages are now only ranked fourth as a business risk by company leaders, behind weak domestic demand, economic policy conditions and labour costs.
“High energy costs, economic policy uncertainties that affect investment decisions and intense international competition pose major challenges for companies,” said DIHK’s deputy managing director, Achim Dercks.
