Economy
Dampers: IFO index drops – economy split regionally
The economy in Germany is weakening: the IFO index sinks, which is stagnating, regions are developing differently and the labor market is under pressure. Are there bright spots?
There is no economic recovery in Germany in Germany: a survey among German companies on the economic situation is surprisingly negative. The weak economy also leaves traces on the labor market.
In September, the ifo business climate dropped by 1.2 points to 87.7 points, as the Munich research institute announced. The approximately 9,000 companies surveyed have rated the current situation and future business less. The business climate has deteriorated noticeably, especially for service providers.
Analysts had expected an increase
“Hope for economic recovery suffers a damper,” said IFO President Clemens Fuest. Analysts were surprised by the decline. They had expected an average of 89.4 points with an increase in the most important German economic barometer.
According to the IFO, the number of orders in industry decreased again, and the small upward trend for investment goods manufacturers had evaporated again. The skepticism in the area of transport and logistics was particularly clear, where many companies are faced with falling margins and high costs.
There was only a positive outlier in the main building industry. There the companies looked a little more optimistic about the coming months and were also more satisfied with the ongoing shops.
Overall, however, the German economy is still stuck. In 2023 and 2024 the economic output had shrunk, and the picture remains weak in 2025. In the second quarter, the gross domestic product (GDP) fell by 0.3 percent compared to the previous quarter.
New figures from the statistical offices show how much the situation develops. In seven federal states, economic output decreased in the first half of the year compared to the same period-including with North Rhine-Westphalia, Bavaria and Baden-Württemberg, three heavyweights, which together make up more than half of the GDP. Overall, a red zero was a total of a total of Germany.
However, some countries were able to stand out positively. Bremen recorded the strongest growth with 2.9 percent. Mecklenburg-Western Pomerania (2.0 percent), Berlin (1.3 percent) and Hamburg (1.1 percent) also grew noticeably. Lower Saxony had an increase of 1.0 percent, Thuringia to 0.6 percent, Rhineland-Palatinate and Saxony to 0.1 percent each.
At the other end of the scale, the Saarland stood with a GDP minus of 1.9 percent, followed by Brandenburg (minus 1.0) and Baden-Württemberg (minus 0.8) and Bavaria (minus 0.4). In Saxony-Anhalt it was 0.3 percent down, in North Rhine-Westphalia and Schleswig-Holstein by 0.2 percent each. Hessen stagnated from about zero.
According to a forecast by the Nuremberg Institute for Labor Market and Vocational Research (IAB), the number of employed people will decrease for the first time in 2026- by around 20,000. As early as 2025, the growth with only 10,000 new jobs was significantly lower than in the past. At the same time, unemployment will initially rise, but will go back for the first time in the course of 2026.
The background to the apparently contradictory development is demographic change: “The shortage of the labor market attracts that the departure of the baby boomers can no longer be compensated for,” explains Enzo Weber, head of the IAB research area forecast and overall economic analyzes.
For 2025, IAB expects economic growth of 0.2 percent and an increase of 1.1 percent for 2026. However, the effects on employment remained limited because there are simply fewer workers.
Shifts between the industries
“The opportunities for an employment structure are very limited compared to previous record increases,” says Weber. At least with the social security contributions, the IAB expects a further increase of 40,000 each in the current and coming year to 34.98 and 35.02 million people through part -time employment.
Especially the manufacturing trade is under pressure, burdened by the transformation and the weak foreign trade as a result of US customs policy. A decline of 130,000 jobs is expected for 2025, another minus of 70,000 in 2026.
The situation is different in the public service, in education and health. There, the IAB forecast a strong increase of 210,000 jobs for 2025, and a further 130,000 are to be added in 2026. The reasons are the expansion of childcare and aging society. This showed opportunities for growth, at least in individual areas – even if the overall economic mood is still characterized by restraint.
dpa
Source: Stern
