German business climate survey shows outlook worsened in January
A widely watched survey that tracks German companies' views toward the business climate in the country fell further to begin the year.
The ifo Institute's monthly Business Climate index, based on surveys of roughly 9,000 German companies, dropped by 1.1 points in January to 85.2 points, defying analyst expectations of an improvement.
The Munich-based economic research institute published the latest results on Thursday. The index also dropped in December.
The companies surveyed assessed both the current situation and their expectations for future business less favourably, according to ifo.
"The German economy is stuck in recession," said ifo Institute President Clemens Fuest.
The business climate in the retail and construction sectors both deteriorated. In the service sector, the corresponding sentiment indicator fell significantly.
In contrast, the mood among industrial producers improved in January. But although the outlook was better, even industrial firms remained generally pessimistic overall.
"The economy is currently in the doldrums," said Jens-Oliver Niklasch, an analyst with the Landesbank Baden-Württemberg (LBBW) on the survey results.
With new orders and production in industry already in decline, the services sector now seems to have been hit too, he said.
Jörg Krämer, chief economist at Commerzbank, said the German economy is off to a poor start to the year.
Krämer forecast Germany's economic output to continue to shrink in the first quarter of 2024, and said that a strong upturn should not be expected in the spring.
Krämer also expects Germany's gross domestic product (GDP) to fall by 0.3% for the year as a whole.
