german Business Climate: Order Situation Remains Challenging in Early 2026
Teh German economy continues to grapple with subdued demand, as a meaningful proportion of companies report insufficient order volumes. Recent data indicates that approximately one-third of businesses are experiencing a lack of new orders, a figure that, despite a slight decrease from 36.9% in October to 36.3% in January, remains considerably above historical averages.
Klaus Wohlrabe, head of ifo surveys, cautioned against interpreting the marginal improvement as a sign of recovery, emphasizing that “weak demand is putting a strain on large parts of the economy and is further exacerbated by high costs and declining competitiveness.”
Within the industrial sector, the proportion of companies facing order shortages has remained stable at around 35.9%. Mechanical engineering is experiencing particularly acute difficulties, with the share of affected companies rising from 41.4% to 43.9%. Manufacturers of electronic and optical products also report a worsening situation, increasing from 40.7% to 46.8%. While the automotive industry reports challenges for roughly a quarter of its companies,beverage manufacturers are seeing some relief,with the percentage of firms reporting order deficiencies halving to 13.6%.
The service sector demonstrates a slightly more optimistic trend,with the share of companies reporting a lack of orders decreasing from 33.4% to 31.1%. However, specific segments like management consulting (53.8%) and advertising (51.2%) continue to struggle considerably. Accommodation and IT service providers also maintain high levels of concern, with 48.1% of companies in each sector reporting inadequate order books.
Conditions in the trade sector remain particularly difficult. A substantial 62% of wholesalers are currently reporting a shortage of orders, while the situation for retailers has slightly deteriorated, increasing from 48.7% to 51.3%. This indicates that roughly half of all retail companies are contending with insufficient demand.
Keywords: German economy, order situation, business climate, demand, industrial sector, service sector, trade, ifo survey, competitiveness, economic strain.