Sentiment in the German economy has deteriorated considerably, the ifo Business Climate Index fell to 84.3 points in September, down from 88.6 points in August.

This is its lowest value since May 2020 and the decline is affecting all four sectors of the economy. Companies assessed their current business as clearly worse, pessimism regarding the coming months growing rapidly in retail, where expectations have fallen to a record low.

In manufacturing, the index fell tangibly. Companies were less satisfied with their current business and are definitely worried about the coming six months. The last time expectations were this pessimistic was in April 2020. The mood has soured across almost all industries. Order books shrank further.

In the service sector, the Business Climate Index took a nosedive. Assessments of the current situation were significantly worse. Companies are also expecting a further marked deterioration in the coming months with hospitality industry bracing for particularly tough times.

In trade, the business climate worsened again. For the first time since February 2021, the business situation is back in negative territory. Expectations also darkened further.

In construction, the index weakened noticeably. Businesses were less satisfied with their current situation and expectations were more pessimistic than in the previous month.