German business climate falls to lowest since May 2020

The Ifo Business Climate Indicator for Germany fell for the second consecutive month to 84.7 in December 2024, marking its lowest point since May 2020.

German business climate falls to lowest since May 2020

This decline came after a downward revision of November's figure to 85.6, aligning with market forecasts. The sub-index measuring business expectations experienced a significant drop, falling to 84.4 from November’s 87, signaling heightened pessimism about the economic outlook. Meanwhile, the gauge for current conditions slightly improved, rising to 85.1 from 84.3. According to the Ifo Institute, "The weakness of the German economy has become chronic." Business sentiment deteriorated sharply in the manufacturing and services sectors and continued its decline among retailers, reflecting widespread economic challenges.

Construction brightens outlook amid Germany's economic struggles

However, in contrast to this overall downturn, the construction industry showed a notable improvement in sentiment, offering a rare bright spot in an otherwise bleak economic landscape. These trends highlight the uneven pressures across Germany's economy as it grapples with prolonged stagnation.