Germany Slides Deeper into Recessionary Territory

Image © Alfred Yaghobzadeh, European Commission Audiovisual Services

The first major economic release of the week confirms things aren't getting better for Europe's biggest economy.

The German Ifo Ifo Business Climate Index (BCI) survey showed a fall from 86.5 in October to 85.7 in November, which was weaker than expected (consensus 86.0).

The current conditions index fell from 85.7 to 84.3 and the expectations index fell from 87.3 to 87.2.

"The reading confirms that the German economy remains in the doldrums," says Franziska Palmas, Senior Europe Economist at Capital Economics. "The outlook for 2025 is also poor as a loss of competitiveness in industry and adverse demographics are likely to offset any boost from a recovery in real household incomes and monetary easing."

The BCI is consistent with German GDP contracting sharply, as is last week's PMI survey for November. The Composite PMI also fell further into recessionary territory in November.

"Things could hardly have turned out much worse," says Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank. "The eurozone's manufacturing sector is sinking deeper into recession, and now the services sector is starting to struggle after two months of marginal growth."