The mood among German exporters was lower than ever in April. After the crash, the expectations of economic researchers at the Ifo Institute have clearly struck again. In May industry exports rose from minus 50.2 to minus 26.9 points, the Munich Institute said in its survey of around 2,300 manufacturing companies.
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This strong increase has so far been unique, the economic researchers said. But the companies are still far from optimism. Ifo President Clemens Fuest said: “After all, the German export industry sees a silver lining.”
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Exports are expected to continue to decline in almost all areas. However, this is less strong than expected in the previous month. According to Ifo, export expectations have risen in all key industries, especially in the automotive industry. Companies are also less pessimistic in the electrical industry. In mechanical engineering and metal production and processing, on the other hand, skepticism prevails despite the improvement.
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Optimism in all economic sectors
Overall, the mood of companies in Germany has brightened somewhat after a historic slump. The Ifo Institute’s business climate index rose from its historic low in April in May by 5.3 points to 79.5 points. The first easing of the corona restrictions had given hope, according to Fuest. While the companies surveyed assessed the current situation somewhat poorly, the prospects for the coming half year were perceptibly better. The business climate brightened in all economic sectors examined by the Ifo.
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As with entrepreneurs, the mood among consumers is improving again. The consumer researchers of the Nuremberg market research company GfK have eased the first mood in the corona crisis and the consumer mood in Germany is brightening again. For June, the GfK market researchers predict an increase in their barometer to minus 18.9 points – 4.2 points more than in May.
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Recently, the consumer climate had plummeted to a record low. “Consumers in Germany are recovering somewhat from the shock triggered by the Covid 19 pandemic in May,” said GfK expert Rolf Bürkl. The gradual opening of many stores had certainly contributed to the propensity to consume no further losses and could even increase. “Nevertheless, there is great uncertainty among consumers.” The barometer still shows the second lowest value ever measured for the consumer climate in Germany.
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The virus crisis hits the economy with full force. Falling consumer spending and shrinking investments caused the German economy to collapse at the beginning of the year. Gross domestic product (GDP) fell 2.2 percent from the previous quarter from January to March, which is the largest since the 2008/2009 financial and economic crisis. “Consumers don’t see the German economy by a long shot and a severe recession is coming,” said Bürkl. “The fear of losing a job remains high and this is currently proving to be an important barrier to consumption alongside the loss of income.” Dealers and manufacturers would have to adapt to this.
Economic expectations of consumers are recovering
After two consecutive declines, consumer expectations rose slightly in May, but remained well below the long-term average. The economy is now starting up faster than a few weeks ago, Bürkl explained. “This also increases consumer hope that a debacle on the labor market will be prevented.” After the drastic decline in the previous month, consumers now assessed their future financial situation a bit better.
Nevertheless, short-time work and unemployment led to significant income losses for many households. “There is still no end in sight to the lockdown for a number of self-employed people, for example from the cultural sector. Your income is therefore still zero. The willingness to do bigger purchases again has increased slightly.
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