Recruit Sales in Germany Update Bulletin September 2024

GERMAN ECONOMIC INDICATORS September 2024

The key economic trends suggest there has been no long-term, consistent revival in economic output for more than two years in Germany. A similar sharp decline usually follows a slight increase in one quarter in the following quarter.

Economic output thus contracted by 0.1 per cent in the second quarter of 2024, after growing by 0.2 per cent at the start of the year.

The consensus seems to be that this crisis is primarily structural. caused by a range of factors such as decarbonisation, digitalisation, demographic change, the coronavirus pandemic, the energy price shock, and China’s changing role in the global economy/. These factors put pressure on established business models and force companies to adjust their production and sales structures.

Compared to other countries, Germany has been hit especially hard by these changes, especially in the steel and automotive industries.

On the one hand, the labour force potential is developing less favourably, and the population is aging faster. On the other, structural change is particularly affecting manufacturing, which accounts in Germany for a significantly higher proportion of economic output. 

Energy-intensive industries, which are responding to the high energy costs, as well as mechanical engineering and the automotive industry, which are facing increasing competition from China in addition to restructuring in connection with decarbonisation and digitalisation, carry more weight than in other countries.

All the major car manufacturers in Germany seem to be suffering, especially Volkswagen, which is looking to shed thousands of staff and shut production sites in order to cut costs.

The leading economic indicators do not indicate an economic turnaround for the third quarter of 2024. The ifo Business Climate Index fell for the third time in a row in August, with companies assessing both the current situation and business expectations more pessimistically.

The index fell particularly sharply in manufacturing, which may be partly explained by the slowdown in growth in key sales markets, particularly the USA and China.

In view of the continued weak foreign demand, the ongoing geopolitical uncertainties and the only gradual and delayed easing effects of monetary policy, the industrial downturn is likely to continue for the time being and dampen export-oriented German industry.

German Exports September 2024

Exports are forecast to remain sluggish in 2024 and slowly recover in 2025. For the time being, the export industry is not driving growth in the German economy.

Export demand is lacking momentum, with little evidence of substantial improvement. In view of the persistently weak global industrial economy and disappointing reports on purchasing managers' indices in key sales markets, for example automotive, no significant impetus is expected for the German export industry in the coming months.

Employment

Companies in Germany are being more cautious about their personnel planning. The ifo Employment Barometer fell to 94.8 points in August, down from 95.3 points in July, marking the third consecutive fall.

The weak economic development is also being reflected in weak employment development, and the lack of orders are causing companies to put the brakes on hiring or in many cases laying staff off, or even re-structuring to streamline on staff.

In manufacturing, the barometer fell noticeably. More companies are considering cutting jobs, such as VW, SAP, and ThyssenKrupp. The same applies to trade, where there is a lack of customers in stores.

In the construction industry, however, employees are to be retained despite the severe crisis. A positive hiring trend can be found only amongst service providers, in particular the IT sector and tourism, which is doing extremely well, despite higher costs for travel and hotels.

Summary

If you are looking to recruit experienced sales staff to enable you to exploit new or existing markets within Germany, the UK, Europe or further afield, please call us for a no-obligation discussion.

Some facts about Germany

Germany has a population of eighty-four million people.

Germany is the seventh-largest country in Europe. Covering an area of 137,847 square miles, of which 34,836 square miles is covered by land and 3,011 square miles contains water.

The economy of Germany is a highly developed social market economy. The country accounts for about 28% of the euro area economy according to the IMF. 

With a gross domestic product of 4,121 billion euros in 2023, Germany is the third largest economy in the world after the United States and China, making it the largest economy in Europe.

Exports of motor vehicles and parts and chemical products in particular make Germany the third largest export nation in the world. At 70%, the service sector accounts for the largest share of the country's gross domestic product.

Germany is one of the world’s premier locations for organising international trade fairs. Two-thirds of the major global industrial events take place in Germany. Ten million visitors attend around 150 international trade fairs and exhibitions each year.

Please note the information contained herein is an aggregate of news stories, by commentators widely available - readers should seek independent verification, and this in no way represents the views or opinions of Standley Associates.

We will continue to check the news reports and will provide monthly summaries of the trends