There has been no boost in confidence among German businesses as a result of Euro 2024, the latest ifo Business Climate Index has found, with sentiment deteriorating in June, compared to the previous month.
The index found that business sentiment declined in June, to 88.6 points – down from 89.3 points in May.
This drop was due to more pessimistic expectations on the part of business owners, though assessment of their current situation remained unchanged.
“The German economy is having difficulty overcoming stagnation,” commented Clemens Fuest, president of the ifo Institute.
Sector By Sector
In the manufacturing sector, the business climate declined after three consecutive rises, the data showed. Companies expressed more scepticism about the coming months, particularly due to a declining order backlog. However, they were somewhat more satisfied with current business conditions.
In contrast, the service sector saw an increase in its index. Service providers assessed their situation more positively, and the outlook for the second half of the year brightened. Sentiment in the hotel sector improved, but the hospitality sector experienced the opposite.
Elsewhere, the trade sector, including retail, experienced a significant deterioration in business climate, according to the ifo Institute. There was a notable increase in sceptical sentiment regarding future expectations, and assessments of current business conditions were revised downward.
“Both wholesalers and retailers were equally impacted by the negative development,” Fuest added.
In the construction sector, the index rose slightly, due to less pessimistic expectations. However, the current situation was viewed as worse, with a lack of orders remaining a core issue.
Retail Sales Boost
A study last month indicated that the Euro 2024 football championship is expected to generate additional retail sales of around €3.8 billion in Germany, according to the HDE retail association.
The HDE, in collaboration with Appinio, conducted a survey among 1,000 people in Germany, aged 16 to 65, to gather this data.
