The mood in the executive suites of German companies is brightening despite the ongoing economic crisis, thereby illustrating hope for better times. The Ifo business climate index rose to 88.4 points, after 87.7 points in September, as the Munich Ifo Institute announced on Monday in its survey of around 9,000 managers. Economists surveyed by the Reuters news agency had expected an increase to 88.0 points for October. According to Ifo, the reason for the brightening of the mood in October was the better expectations for the coming months. The current business situation, however, was assessed somewhat worse. “The German economy continues to hope for an economic recovery in the coming year,” emphasized Ifo President Clemens Fuest (57).
Ifo survey chief Klaus Wohlrabe said in a Reuters interview that expectations rose in all major sectors in October – both in industry and in the construction sector and service providers: “We see a slight glimmer of hope in industrial orders.” The decline in demand appears to have stopped there. Things are going up in important sectors such as automotive and mechanical engineering as well as electrical engineering, but not in the chemical industry. “The lack of orders remains a clear problem and has not yet been solved,” the expert added.
The increase in the Ifo barometer is of course encouraging, summed up LBBW expert Jens-Oliver Niklasch. However, it is not entirely easy to share the confidence that there will be a change for the better, because the latest economic figures are largely unpleasant: “In addition to the already known stress factors, the problem of the availability of microchips also arose this month,” added the expert. The Chinese government recently imposed an export ban on the chip manufacturer Nexperia, after the Dutch government took control of the company based there. Since then there have been delivery problems, primarily in the automotive industry. Manufacturers and suppliers fear production stops
.
“Business climate continues to sag”
The rise in the barometer is not a sign of improvement, says the chief economist at Hauck Aufhäuser Lamp Privatbank, Alexander Krüger: “The business climate continues to sag.” In any case, the loss of sentiment from the previous month has not been made up. In this condition, the business climate signals continued stagnation tendencies.
The Bundesbank assumes that the German economy has not yet gotten off the ground in the summer. Experts surveyed by Reuters also see this in a similar light, as they expect stagnation for the gross domestic product in the months of July to September in the data due on Thursday. Economic output shrank by 0.3 percent in the second quarter. Ifo President Fuest recently warned urgently in a newspaper interview of a decline in the local economy and called the situation dramatic. The economist called on the federal government to present a “comprehensive overall reform concept” by spring 2026 that goes far beyond the coalition agreement.
Carsten Brzeski, chief economist at ING Bank, sees hope in the boardrooms as politicians dwindle: “Another reason for the worsening mood Germany is domestic politics,” he says. “The hope that a new government and fiscal stimulus would finally free the economy from its ongoing stagnation appears to have evaporated.”