The latest data from the Ifo Institute has confirmed that Germany, the largest economy in the eurozone, is facing significant challenges. In January, the Ifo business-climate index fell to 85.2, down from 86.3 in December. This decline was unexpected, as economists had predicted a slight improvement in sentiment.
Several sectors were particularly impacted. The services sector, construction, and trade all experienced downward slides, with services providers expressing concerns about their order backlog and future prospects. However, the manufacturing sector provided some positive news, as firms exhibited a more optimistic view of current business conditions and expressed less pessimism regarding future expectations, despite facing a decrease in order books.
Overall, companies across the private sector assessed their current situation as worse than before and predicted gloomier prospects for the coming months.
This data aligns with the weak purchasing managers' index for the same period, further underscoring the challenging state of the German economy.
Clemens Fuest, President of the Ifo Institute, summed up the current situation succinctly: "The German economy is stuck in recession."