Recruit Sales in Germany Update Bulletin September 2023

GERMAN ECONOMIC INDICATORS June-September 2023

The German economy seems destined to contract by 0.4% in 2023, the Ifo Institute stated last Thursday, confirming its previous forecasts published in June.

Contrary to previous expectations, the economic recovery is likely to fail to materialise in the second half of the year. Furthermore, Germany is the single major economy globally for which a contraction is forecast in 2023.

Germany had not benefited from the post-pandemic service sector boom as much as other European countries, where this sector plays a bigger role.

The economic shocks currently hitting the global economy may hit Germany particularly hard because they affect industries that are particularly important to Germany, especially the automotive, building and retail sectors.

Ifo forecasts a 0.2% contraction in gross domestic product (GDP) in the third quarter, after stagnation in the second.

The ZEW Indicator of Economic Sentiment for Germany increased slightly to -11.4 in September 2023, up from the previous month's reading of -12.3 and surpassing market expectations of -15.0. These improved economic prospects for Europe's largest economy are in line with a notably more optimistic view of international stock market developments, driven by growing expectations of stable interest rates in the Eurozone and the US, along with anticipations of a further easing of China's interest rate policy.

However, the assessment of the overall economic situation in Germany saw a significant drop of 8.1 points, falling to -79.4, marking its lowest level in three years thus confirming the statements from the Ifo Institute last week.

The inflation rate in Germany, measured as the year-on-year change in the consumer price index (CPI), stood at +6.1% at the beginning of September 2023.

High inflation is reducing real incomes and savings, damping private consumption. Retail food prices continue to be high due to rising production costs, in turn caused by high energy costs.

German Exports July 2023

130.4 billion €
-0.9% on the previous month
-1.0% on the same month a year earlier

On a calendar and seasonally adjusted basis, Germany exported goods to the value of 71.9 billion € to the Member States of the European Union (EU) in July 2023.

Most German exports in July 2023 went to the United States. After seasonal and calendar adjustment, exports of goods to the United States were up 5.2% compared with June 2023.

Exports to the People's Republic of China increased by 1.2% to 8.3 billion € and exports to the United Kingdom dropped by 3.5% to 6.3 billion €.

Employment and Salaries July 2023

Employment remained stable in July 2023. Approximately 45.7 million persons resident in Germany were in employment in July 2023. According to provisional calculations of the Federal Statistical Office the seasonally adjusted number of persons in employment increased slightly by 15,000 (0.0%) compared with the previous month. In June 2023, the number of persons in employment remained almost unchanged from the previous month. 

The minimum wage in Germany is set to rise in two stages from the current €12 to €12.82 per hour. The first increase to €12.41 is to take place at the beginning of next year, with a second boost to follow in 2025.

More than 3.5 million people in Germany have more than one job - a figure which has more than doubled in the past 20 years. The problem is being exacerbated by high inflation which, in 2022, reached an average of 7.9 percent - the highest level since German reunification. According to the Secretary-General of the service trade union Verdi Germany is becoming a "low-wage country".

Furthermore, and according to the most recent "poverty report" by the German Parity Welfare Association, 16.9 percent of the population in Germany is affected by poverty, and the trend is rising, as sharply increasing prices in recent months are making more and more workers poor.

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.

*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