ifo Business Climate Index Rises (May 2022)

Sentiment in the German economy has brightened. The ifo Business Climate Index rose to 93.0 points in May, after 91.9 points in April. The companies were above all much more satisfied with their current business. In contrast, expectations barely changed, with companies remaining skeptical. The German economy has proven itself resilient in the face of inflation concerns, material bottlenecks, and the war in Ukraine. There are currently no observable signs of a recession. 

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War Is Causing Some Short-Term Uncertainty among German Companies

Since the outbreak of war in Ukraine, German companies are once again experiencing some uncertainty about how their sales will develop in the future. This is the finding of an analysis conducted by the ifo Institute. Compared to the shock caused by the pandemic, however, companies are experiencing only moderate uncertainty. “The war in Ukraine has not triggered the kind of uncertainty crisis we saw at the beginning of the Covid-19 pandemic so far. And how severely companies would be affected by a potential halt to the supply of Russian gas is not a factor here,” says ifo researcher Manuel

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Record Order Backlog in German Manufacturing

Order backlog among Germany’s manufacturers is currently at a record high. An ifo survey in April found that even without a single new order, production could continue for 4.5 months. In the previous survey in January, that figure was 4.4 months. The long-term average for an order backlog is 2.9 months. 

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