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German IFO data paints a pessimistic picture

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(Kitco News) - German business morale deteriorated further in the month of November as the IFO survey showed. The report said "Supply chain bottlenecks are putting companies under real pressure, there is no sign of a let-up. A clear majority of companies plan price increases. Business sentiment for the services sector has notably deteriorated. Hospitality and tourism sectors face difficulty over the next 2-3 months. We expect GDP stagnation in Q4."

The research organization noted companies were less satisfied with their current business situation, and expectations became more pessimistic. Supply bottlenecks and the fourth wave of the coronavirus is challenging German companies. Just over the weekend, the German government warned that the nation could go into another lockdown if the situation does not improve. 

Health minister Spahn recently said, “We are in a situation where I would not recommend ruling anything out, however tough that would be,”. On Tuesday rose to just under 400 per 100,000 people over the past week, more than double the peak in the spring. In Bavaria, the contraction rate is at almost 650 and in Saxony close to 1,000. Spahn said that if stringent contact restrictions were imposed, “it would be a regional measure.” In hotspots like Bavaria and Saxony, where the situation is “very, very, dramatic,” tougher restrictions are already needed to try to contain the spread and ease the burden on hospitals.

German IFO Business Climate Nov: 96.5 (est 96.6; prev 95.4)
- IFO Current Assessment Nov: 99.0 (est 99.0; prev 100.1)
- IFO Business Expectations Nov: 94.2 (est 95.0; prev 97.7)

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