DGerman companies are significantly more optimistic about the current year than they were at the end of 2022. While 39 percent of the companies surveyed expected a downturn in business for 2023 last autumn, it was only 26 percent in March and April 2023, according to the economic survey published by the institute on Saturday of the German Economy (IW). 36 percent were now assuming growth, compared to only 26 percent in late autumn.
That also brings good prospects for the job market, explained the IW. More than every third company wants to hire more employees than in the previous year, only 24 percent planned to cut jobs.
Investments are also to be expanded, as the IW business survey also showed. Pandemic and the Russian war against Ukraine had slowed things down recently. According to the survey, 37 percent of companies want to invest more than in the previous year, 24 percent expect lower investments. The IW surveyed a total of 2,327 companies.
Construction industry sees no country
According to the IW, optimism is slowly returning in both industry and the service sector. Only in the construction industry is the mood still bad. Although the production expectations have improved here too, “the pessimists still dominate,” according to the results of the survey.
A differentiated picture also emerges regionally: In Hesse, Rhineland-Palatinate and Saarland, production expectations are predominantly positive. The mood in Saxony and Thuringia is comparatively bad: optimists and pessimists are equally represented here. There are very few optimists in North Rhine-Westphalian companies – here the energy-intensive industry “still has to contend with enormous burdens”.
The future is slowly clearing up
“Companies can now assess the overall economic situation better than they could a few months ago,” explained DIW economist Michael Grömling, who regularly surveys companies. Nevertheless, there can be no talk of an upswing. “In earlier phases of the upturn, such as after the global financial market crisis or the European debt crisis, the mood among companies was significantly better,” explained Grömling.
“High energy costs and the longstanding investment backlog will continue to burden companies for some time to come.” The comparatively poor expectations of the construction industry and some federal states are cause for concern.
