Employment Indicator Declines Further
In December, Germany's key employment prospects index dropped again, marking its poorest performance since the initial COVID-19 wave in May 2020. This decline occurred even with the government's economic support measures in place.
The ifo Institute's latest barometer reading fell to 91.9 points from November's 92.5 points. According to the Munich-based research organization, persistent manufacturing sector difficulties are a primary factor behind this trend.
“In 2025, we experienced gradual job cuts, especially in industry,” stated Klaus Wohlrabe, ifo's survey head, in an official announcement. He added, “The weak economy is continuing to slow down the labour market.”
Broad Sector Pessimism
While economists anticipate slight growth next year from a €500 billion debt package, most industries plan continued workforce reductions in coming months. Service providers and retailers remain cautious or intend to downsize, though construction shows less pessimism, aiming to maintain current staffing levels.
The report notes that only tourism and management consulting sectors express optimism, planning to increase hiring next year.
Comparative Economic Performance
International Monetary Fund projections from October forecast moderate 1.5% average growth for Western industrialized nations and Japan. Meanwhile, Germany's economy may stagnate this year, with ifo predicting just 0.1% GDP growth.
For 2026, German economic output could expand by 0.8%, falling short of expectations set when the new government assumed office in May.
