GERMAN DATA
The March IFO Employment Barometer remained in contractionary territory but registered a 3-month high of 96.3 points (vs 94.9 prior). Overall, the report showed a broad-based improvement in employer sentiment. But the barometers for each sector (except services) remained in contractionary territory, meaning that firms project job losses on balance - suggesting that the softening in the German labour market continues.
- IFO notes that employers are becoming better able to assess economic conditions, resulting in reduced uncertainty and thus higher hiring expectations. The report additionally notes that rising real wage increases are providing some optimism for employers in the services sector as they "hope that consumption will pick up again", which is reflected in their personnel planning, specifically in the tourism industry.
- Looking at the details of the report, the manufacturing balance rose to -9.3 points (vs -13.4 points prior), its highest value since August 2023, the trade sector rose to -9.8 (vs -13.0 prior), and the services balance moved further into expansionary territory at 5.2 (vs 2.5 prior).
- Construction sector was the only sector to see its balance fall, to -8.6 (-7.6 prior), its lowest value since June 2010. General sentiment in construction is currently bleak, as large insolvencies in the sector weigh on sentiment amid tight financing conditions.
- March's Flash PMIs saw some support for the labour market but "wasn’t enough to prevent a renewed decline" in the overall PMI employment reading. Overall, some softening is ongoing in the German labour market, but the deterioration seems to be contained.
MNI, ifo
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