Germany

German companies are regaining some hope

German companies are regaining hope. Business expectations for the coming months improved significantly in May following the crash in March and April. The incipient easing of corona restrictions is evidently improving the prospects for many companies again. However, this is not yet the all-clear. The assessment of the current business situation deteriorated even further in May. The crisis is therefore still far from over. But at least the first glimmers of hope are emerging in the battered service and retail sectors. Meanwhile, a deep slump in overall economic output is expected for the second quarter. In the first three months of 2020, gross domestic product had already slumped by 2.2 percent. And this despite the fact that the corona pandemic did not yet have a significant impact on economic output in January and February, and the most severe restrictions did not take effect until mid-March. According to current reports, private…

Purchasing managers‘ indices in the EMU: Downturn slows down, nothing more

The eurozone economy is still in recession in May as restrictions to contain the spread of the global coronavirus pandemic continue to weigh on the economy. Although sentiment among purchasing managers improved somewhat as a result of the gradual easing, a return to economic normality is not in sight. This is because the comprehensive composite purchasing managers‘ index of sentiment in industry and the service sector is still well below the neutral level of 50 index points at 30.5, compared with 13.6 points in the previous month. According to IHS Markit, both sub-sectors – industry and services – contributed to the rise. Among the service providers particularly affected by the initial restrictions, the improvement in May was somewhat stronger. This is also reflected in the survey results among German and French purchasing managers. Overall, the improvement at an extremely low level is a first ray of hope. Nevertheless, the eurozone…

Climate-friendly cars as an investment programme

For many years the fear of dwindling oil wells dominated the ideas about the end of the combustion engine. In the meantime, however, the revolution in motor vehicle propulsion has already been heralded. While the share of alternative technologies in new passenger car registrations in Germany was still 1.7 percent in 2015, it had already reached 8.8 percent by 2019. The driving force behind the increasing supply of „electric cars“ and hybrids and the equally increasing demand is climate and environmental protection. Currently, the focus is on bans on diesel driving, specifications for the fleet consumption of car manufacturers and the environmental bonus for the purchase of electric vehicles. With regard to the future development of automotive drive concepts, we expect a noticeable increase in the number of electrified vehicles over the next ten years, but we also see a high proportion of vehicles with combustion engines. In 2030 battery…

Almost all sectors in Germany with all-time lows in business climate

The Corona pandemic has the German economy firmly in its grip. Many companies were at least temporarily closed or had to remain closed in April. It was foreseeable that this would not be without consequences for the mood of the companies. The business climate index fell from 85.9 points in March to just 74.3 points. For comparison: the lowest level during the financial market crisis was 79.9 points! All-time lows in the business climate were also reported by companies in the manufacturing, wholesale, retail and service sectors. Only the main construction industry can escape this trend somewhat. However, even here expectations have fallen to a historic low. However, a clear majority of construction companies still assess their current business situation positively, in contrast to all other sectors. By contrast, the slump in the business climate in the retail clothing and footwear sector is really dramatic. Nearly all companies in this…

German companies: Business climate worse than ever before

The mood in German companies deteriorated in April to an unprecedented extent. As the ifo Institute noted in its monthly survey, both the assessment of the current business situation and business expectations collapsed at a record pace in April. In contrast to the economic and financial crisis a good ten years ago, this time the service sector and retail trade have been hit particularly hard. The lockdown has forced many companies to completely discontinue their business operations. The collapse in sentiment in these sectors was therefore particularly severe. However, sentiment indicators in the construction industry and especially in the manufacturing sector also fell sharply once again. The business climate in the manufacturing sector is currently as bad as at the height of the financial crisis. In contrast to the ZEW Indicator of Economic Sentiment, for example, the ifo survey shows a very sharp drop in the expectations component in addition…

Many look at Germany with envy

It is slowly becoming clear that the consequences of the corona crisis will occupy us for some time. Around the world, companies and consumers are losing confidence in the future economic development. Although the large fiscal packages were able to soften the initial shock, a certain realism seems to be slowly taking hold. Germany is still „the place to be“ in terms of the course of the Covid-19 wave, the mortality rate and the financial possibilities to cushion the economic crisis. This is a strong sign of Germany’s structural strength, but of course it also arouses desire among our European neighbours. European unity and a stable euro area are a great asset for all countries involved. This should not be put at risk in the coming negotiations. However, all countries should also think about the respective resilience and political enforceability of the envisaged measures. Otherwise, a compromise that has now…

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