German companies are much more optimistic about the current year than they were at the end of 2022. While 39 percent of the companies surveyed expected business to decline in 2023 last fall, the figure was only 2023 percent in March and April 26, according to the economic survey published on Saturday by the German Economic Institute (IW). 36 percent now expected an increase, compared to only 26 percent in late autumn.
This also brings good prospects for the labor market, the IW explained. According to the survey, more than one in three companies wants to hire more employees than in the previous year, and only 24 percent plan to cut jobs.
Investments are also to be expanded, as the IW business survey also showed. The pandemic and the Russian war against Ukraine had recently slowed things down here. According to the survey, 37 percent of companies want to invest more than in the previous year, while 24 percent expect lower investments. The IW surveyed a total of 2327 companies.
Construction industry sees no country
According to the IW, optimism is slowly returning to both industry and the service sector. Only in the construction industry is the mood still bad. Although production expectations have improved here as well, "the pessimists still dominate," according to the results of the survey.
There is also a differentiated picture 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. The fewest optimists are in North Rhine-Westphalian companies – here the energy-intensive industry "still has to contend with enormous burdens".
A glimpse into the future is slowly clearing up
"Companies can now assess the overall economic situation better than they did a few months ago," said DIW economist Michael Grömling, who regularly surveys the companies. Nevertheless, there can still be no talk of an upswing. "In earlier phases of upswing, such as after the global financial market crisis or the European debt crisis, the mood among companies was much better," Grömling explained.
"High energy costs and the now long-standing 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.