Business sentiment brightens, but scepticism looking ahead

were 6.4 percent below their pre-Covid level. Sales in third countries, in contrast, were back to their pre-pandemic level.

Among the individual industries, the strongest growth in nominal sales in the first quarter of the year was recorded by the timber processing industry with an increase of 35.2 percent year on year. In the same period, sales in the chemical industry rose by 25.5 percent on the back of the strongly increased commodity prices. This was the best quarterly performance with sales of more than 49 billion euros despite production levels slipping somewhat in real terms. The same applies to metal production and metalworking enterprises whose sales also showed large growth, rising by 22.7 percent despite decreased production. In machinery manufacturing, production dropped slightly compared to the same period last year. Sales nonetheless expanded by a nominal 7.9 percent. Even in vehicle production, where production in the first quarter had suffered a big 13.8 percent cut, sales increased by a marginal 0.8 percent. Sales of other transport equipment dropped slightly although production here had increased in the first quarter.

Manufacturing revenue* from January till March 2022

Wood processing Paper and pape Chemical industry Metal production and metalworking sector Print industry Pharmaceuticals Glass, ceramics, stone, industrial minerals Textiles, fasion, leather Manufacturing Food, beverages, tobacco Electronic industry Machinery manufacturing Motor vehicle production Other transport equipment production

*Change in percent, year on year Source: Federal Statistical Office -0.6 0.8

13.9 13.8 12.1 11.3

7.9

19.3 18.9 17.6 25.5

22.7 30.3 35.2

Business sentiment brightens, but scepticism looking ahead

In the last two months, the ifo business climate index for Germany recovered somewhat following the slump induced by the war in March. In both April and May, companies rated their current situation as better than in the previous month. Business prospects for the next six months also improved slightly although most companies remain sceptical about the future. Among the individual sectors, service providers were substantially more satisfied with current business. The improvement in current business was the second largest increase since the data series started in 2005. Prospects going forward recorded a clear downturn.

Transport and logistics companies are particularly troubled. Among wholesalers and retailers, the business climate improved for the first time since the outbreak of the war in Ukraine with companies