Wachstumskurve mit Kugelschreiber symbolisiert die wirtschaftliche Lage.

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  • The high energy prices that are increasingly hitting consumers are a burden on economic development in Germany. In addition, a high degree of uncertainty about the economic outlook and rising interest rates are creating a reluctance to invest. Economic output is expected to decline slightly over the winter.

  • However, there are increasing signs that the recession could be milder than previously expected. The ifo Business Climate rose in November for the second month in a row, albeit from a low level. The Federal Government’s decisions on the cap on gas and electricity prices certainly helped to stabilise expectations.

  • Industry had a weak start to the fourth quarter and its outlook remains gloomy. Industrial production declined in October. Energy-intensive sectors in particular have again reduced their output, in some cases significantly. This is probably also due to the fact that certain energy-intensive products were increasingly being imported instead of being produced locally due to the sharp increase in prices.

  • Retail sales declined again in October. However, the mood among private consumers has recently stabilised further, albeit at a still very low level.

  • Inflation fell by 0.5% in November from the previous month, the first decline since November 2021. Compared to the previous year, it rose by 10.0%. The main reasons for the slight decline were lower prices for package tours and lower energy prices.

  • The labour market situation remains stable, even though there are more and more signs of a slowdown. Companies are becoming more hesitant to hire new staff; advertisements for short-time work are increasing again slightly at a low level. In view of the labour shortages, companies are trying to retain their employees.

  • In Q1 to Q3 of 2022, German local courts reported a total of 10,643 corporate insolvencies filed, roughly the same number as in the corresponding period in 2021. Current leading indicators and surveys point to a slight rise in insolvency cases over the coming months, but a “wave of insolvencies” is not in sight.

Germany is facing an economically challenging winter. The high energy prices are increasingly hitting consumers. The loss of purchasing power associated with this is weighing on the outlook for consumer spending and Christmas business. Although industry has to date been able to cope comparatively well with the higher energy prices on average, the effects of the energy price crisis are particularly visible in the energy-intensive sectors. For example, production in the chemical industry in October was about 22% below the level a year before. In addition, the uncertain economic outlook and rising interest rates are causing many investment projects to be put on hold. Development was especially weak in the construction sector in the last quarter as financing has become significantly more expensive.

Even though the latest figures show that the situation of many companies has further deteriorated, there are nevertheless signs of hope. The ifo business climate improved across the board in November as a result of significantly higher business expectations. This is likely to have been helped by the Federal Government decisions on a gas and electricity price cap, which acts like an “insurance policy” for consumers and companies to protect them against excessive price spikes for these energy sources through the subsidisation of a basic level of consumption.

For the first time in a long time, the inflation rate is also showing signs of stabilising. Consumer prices remained at a high level, up 10.0% compared to a year earlier. However, prices fell month-on-month by 0.5%, which is mainly due to a slowing of the rise in energy prices. Following the first decline in producer prices since May 2020, there are also signs that the situation in the upstream stages of the sales chain is easing somewhat (October: -4.2% compared to September).

In its Annual Economic Report, which will be published on 25 January 2023, the Federal Government will present its new annual projection on the economic outlook for the coming year.


Current indicators show a generally weak development in the global environment. Growth in global industrial output slowed to +0.3% in September, and world trade was virtually stagnant, at +0.1%. The latest sentiment indicators also suggest a weak development over the winter. The S&P Global index (formerly IHS Markit) remained below the 50-point growth threshold in November. Compared to the previous month, the index value decreased again and stood most latterly at 48.0 points. There were noticeable declines in both the service and manufacturing sectors. The survey respondents anticipate a difficult global economic environment in the coming months.


Nominal imports fell significantly in the reporting month of October compared to the previous month (-3.7%). The sharp decline is likely to be primarily due to a price effect deriving from falling gas prices. Nominal exports were also lower month-on-month, declining by 1.3%, although they fell less markedly than imports.

After surprisingly robust development over the summer, German foreign trade weakened noticeably in the last two months. The global economic slowdown is also leaving its mark on Germany.
Germany's monthly trade surplus is slowly recovering and stood at +€6.8 billion in October. In August, the surplus had fallen to a record low of +€1.0 billion due to the energy price crisis. By comparison, the monthly trade surplus has averaged at around €18 billion in recent years.

The outlook for foreign trade has brightened slightly, but still remains subdued. The ifo export expectations increased slightly in November. They now stand at +0.4 balance points, 5 balance points higher than in the previous month. Moreover, hopes are raised by the fact that supply chain bottlenecks are easing more and more. Container shipping rates have fallen almost to pre-crisis levels, the gap between incoming orders and production is increasingly closing and in the ifo survey on material shortages too, fewer companies said they were affected by procurement shortages (59% in November, around five percentage points less than in the previous month).


Output in the goods-producing sector remained almost unchanged in October compared to the previous month (-0.1%). While output in industry decreased by 0.4%, there was a significant increase in construction, up 4.2%, which can also be attributed to the comparatively mild weather. The energy sector recorded a sharp decline of 7.6%.

Most of the industrial sectors saw declines in output. In the two important sectors of motor vehicles/motor vehicle parts and mechanical engineering, production was reduced by 2.1% and 1.5% respectively. Energy-intensive sectors in particular have again reduced their output month-on-month, in some cases significantly: chemical products -6.8%, coking and mineral oil processing -6.1%, paper and cardboard -4.9% and metal production and processing -1.9%. Glass, glassware and ceramics, on the other hand, were recently up slightly, climbing by 2.9% after falling for the previous five months.

New manufacturing orders rose by 0.8% between September and October (seasonally adjusted). This means that incoming orders stabilised again after two marked declines in August and September (-2.0 and -2.9%; revised upwards). Overall, orders most recently stood at 3.2% below the previous year’s level. The slight month-on-month increase is mainly due to a recovery in foreign demand, which was 2.5% higher than in the previous month. Domestic orders, on the other hand, dropped by 1.9%. Among the different sectors of the economy, the important area of motor vehicles/motor vehicle parts was able to recover from the previous month’s decline in particular, with an increase in orders of 5.5%.

The outlook for the industrial economy in the coming months remains gloomy due to restrained a noticeably dampened outlook among companies and restrained demand. The fact that the construction industry recently recorded considerable growth is likely to have been linked to the comparatively mild weather in October. The remarkable decline in the energy and water sector can probably be attributed to the efforts of business and private households to save energy.


Retail turnover (excluding vehicles) fell by 2.8% in October compared with the previous month. In comparison with October 2021, the retail trade reported a (real) fall in turnover of 4.9%, which to a large part also reflects the high price increases in the retail sector. In nominal terms, i.e. unadjusted for prices, annual turnover increased by 6.6%. Food retailing recorded a month-on-month decline of 1.2% in October in real terms (-3.9% down on the same month the year before). Sales in non-food reported a decline in turnover of 4.5% (compared to -5.5% in the same month of the previous year). Online and mail-order sales also recorded a fall, down 1.8% in October (compared to -7.1% in the same month of the previous year). New registrations of passenger cars by private owners increased significantly, up by 14.9% in November, following a drop of 5.4% in October.

However, the climate among private consumers is likely to have further stabilised recently. According to the GfK Consumer Climate, a further slight improvement is expected in December. A small increase in the indicator is forecast again, starting from an extremely low level. The ifo business expectations in the retail sector also brightened in November. The balance of figures is no longer at quite as low a level as in previous months. The assessment of the business situation also improved further in the retail sector.


The inflation rate, i.e. the rise in the consumer price level within the space of a year, fell to 10.0% in November. It is thus 0.4 percentage points lower than in the previous month (October: +10.4%). The core inflation rate (excluding foodstuffs and energy) stood at +5.0%, half of the overall rate.

Compared to October, consumer prices fell by 0.5% overall, marking the first decline in a year (November 2021). Given the rising prices for foodstuffs (+1.2%), this development is mainly due to declining prices for package tours, which saw a seasonal fall of 25.3%. Prices for energy also fell slightly, dropping 1.2%. Like the overall rate, the core inflation rate fell by 0.5% compared to the previous month.
The year-on-year rise in food prices hit a new all-time high of +21.1% (previously: +20.3%). The inflation rate for fuel was again a little weaker than in the previous month (+38.7%; previously: +43.0%). There are also signs that the upstream stages of the sales chain are easing somewhat as a result of the slight fall in energy prices. For example, producer prices dropped month-on-month in October for the first time since May 2020 (-4.2%), mainly due to the fall in energy prices (gas: -9.0%; electricity: -15.4%). However, the selling prices charged by suppliers to private households continued to move significantly upwards (gas: +21.8%; electricity: +3.2%), as they passed on the energy price increase to customers with a lag. Wholesale selling prices also decreased in October compared to September (-0.6%). Compared to the previous year, however, they still rose by 17.4%. The situation was similar for import prices in October (-1.2% compared to the previous month; +23.5% compared to the previous year).

High inflation rates are also expected to continue in the coming months. The Federal Government’s autumn projection from mid-October anticipated a rise of 8.0% for the annual average in 2022. For 2023, some dampening is expected (+7.0%) due to the cap on gas and electricity prices.


The labour market situation remains stable, even though there are more and more signs that the momentum is slowing. Compared to previous years, the pick-up in registered unemployment in the autumn was again relatively weak, with an increase of 17,000 persons in November (seasonally adjusted). The main reason for this is that unemployed people are finding it somewhat more difficult to find employment because companies have become more reluctant to hire. The migration of refugees from Ukraine, on the other hand, has recently ceased to raise the figures. Employment was noticeably up again in October (+32,000 persons compared to September). There was also a strong increase in jobs subject to social security contributions in September (+42,000 persons compared to August). The number of people in short-time work rose to around 0.16 million in September. Current indicators suggest that this figure will remain elevated. Looking at the different sectors of the economy, the number of jobs advertised in the non-energy-intensive industries is increasing, but there have so far been no significant changes in particularly energy-intensive sectors. Leading indicators have stabilised somewhat. Although the number of reported vacancies declined slightly, the ifo employment barometer rose again. In view of the shortages on the labour market, companies are continuing efforts to retain their employees.


Following final figures from the Federal Statistical Office, German local courts reported a total of 10,643 applications for corporate insolvency from January to August 2022, 0.4% down on the same period in the previous year.
As a leading indicator, the number of regular insolvencies filed gives an indication of the future development of corporate insolvencies. Following a significant increase of 18.4% in October compared to the previous month, they rose only slightly in November (+1.2%). This means that the number of regular insolvency proceedings filed in November was roughly on a par with the previous year. Experts from the German Economic Institute IW Halle expect an increase in insolvencies in the coming months; however, in a long-term comparison, the current insolvency figures remain low. The implications of the war in Ukraine and the sharp rise in energy prices are a major burden for many companies, and it is difficult to assess its impact in terms of future insolvencies in the coming months.


1 This report is based on data that were available as of 13 December 2022. Unless stated otherwise, these are rates of change against the respective preceding period on the basis of price-adjusted figures which have also been adjusted for calendar-day and seasonal variations.