By Maria Martinez
BERLIN (Reuters) -German business morale unexpectedly fell in November, a survey showed on Monday, as companies lose hope on a recovery of the German economy following two years of contraction.
The Ifo institute said its business climate index fell to 88.1 in November from 88.4 in October, below a consensus of 88.5 from a Reuters poll among analysts.
“Companies have little faith that a recovery is coming anytime soon,” said Ifo president Clemens Fuest.
“After the ups and downs of the past three months, there can no longer be any talk of an upward trend in the Ifo index,” said Ralph Solveen, senior economist at Commerzbank.
There was a decline across all sectors with the exception of services, where there was a small improvement.
The Ifo decline is in line with the message of the HCOB preliminary German flash composite Purchasing Managers’ Index, which showed on Friday that Germany’s private sector growth has lost momentum in November.
ASSESSMENT OF THE CURRENT SITUATION IMPROVES
On the other hand, companies assessed their current situation as somewhat more positive, Ifo said.
After the new government took office in May, German business sentiment trended up, reaching a 15-month high in August, sparked by Germany’s spending U-turn.
But failure to deliver on economic pledges has deepened public frustration and feed perceptions of ineffectiveness.
German Chancellor Friedrich Merz promised an autumn of economic reforms to revive Europe biggest economy, which is only expected to grow modestly this year following two contraction years.
“The failed autumn of reforms must not be followed by a winter of deep sleep,” said Alexander Krueger, chief economist at Hauck Aufhaeuser Lampe Privatbank.
GERMAN ECONOMIC RECOVERY WILL BE LIKE A KETCHUP BOTTLE
After contracting in the second quarter and stagnating in the third quarter, the German economy is expected to grow slightly in the current final quarter of 2025.
However, experts only expect a noticeable economic upturn next year, when increased government spending on infrastructure and defence should provide stimulus for the economy.
Carsten Brzeski, global head of macro at ING said the hope remains that fiscal stimulus in Germany could be like the good old ketchup bottle.
“Initially, no matter what you do, nothing comes out of the bottle until suddenly the whole thing splashes out at once,” Brzeski said.
(Reporting by Maria Martinez, additional reporting by Klaus Lauer, Editing by Miranda Murray)
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