June saw a marginal improvement in business sentiment within the German wholesale sector dealing in raw materials, intermediate products, machinery and equipment. The index, compiled by the Ifo Institute in Munich, rose from -20.5 points in May to -16.7 in June.
Ulrike Mandalka, an industry expert at Ifo, attributed part of the uptick to the construction-adjacent trade, noting that the government’s newly established infrastructure fund is generating hope for renewed impetus. Companies also anticipate increased demand from industrial clients, buoyed by planned accelerated depreciation, tax reductions and lower network charges.
Business sentiment and expectations experienced a slight positive shift among wholesalers in the production linkage trade, moving from -17.7 to -15.1 and from -23.3 to -18.3 respectively. Despite this improvement, overall business remains cautious, as reflected in ongoing, albeit slightly reduced, plans for personnel reductions.
The production linkage trade acts as a vital conduit between manufacturers and consumers within the processing industry, crafts sector and construction industry, making it a key indicator of broader economic trends.
A parallel pattern is visible within the consumer goods wholesale sector, where business sentiment also brightened from -13.5 to -11.1. Assessments of the current situation and future expectations also rose to -12.8 (from -13.7 in May) and -9.5 (from -13.4 in May). “Private households are spending somewhat more on their consumption, offering renewed hope for businesses” stated Mandalka. However, this hasn’t translated into adjustments in personnel planning; traders are, in fact, anticipating a continued decline in employment levels.
