Worsening Economic Condition Persists in the Region
In a recent IHK business climate survey, 524 companies with a combined workforce of 19,100 employees shared their economic outlook for the region. The results paint a grim picture, with many businesses grappling with challenging market conditions.
The survey revealed that every second company has experienced a decline in sales compared to the same period last year. This trend is particularly prevalent in the transport sector, which continues to face difficulties.
However, not all sectors are equally affected. Service providers are the only sector that rates both their current economic situation and their prospects positively. Despite this, nearly every fifth company plans to cut jobs in the near future due to the economic downturn.
The industrial sector, a significant contributor to the region's economy, has seen a significant worsening in sentiment in recent months. Traditional core industry companies, particularly in the automotive and mechanical engineering sectors in the Bergisches Land, have been hit hard. These companies have criticized the restrictive regulatory framework, unclear rules for new technologies like AI, slow approval processes for new factories, and insufficient incentives for private infrastructure investments in Germany.
The business climate index has reflected these challenges, falling by a further five points to minus 18 points compared to the previous survey. Only 18% of businesses rated their business situation as good, while almost half described it as poor.
The consumption-related sectors, such as retail and gastronomy, remain in a slump. Weak demand from the manufacturing sector is affecting the production-related wholesale trade. High labor costs are a significant business risk for every second company.
Despite long-term demographic problems, the short-term skilled worker shortage is not currently a pressing problem for the economy.
IHK President Henner Pasch noted that many companies are suffering from weak order books. He also highlighted that the economic policy framework conditions in Germany are the most important risk factors for more than 60% of survey participants, and three-quarters of industrial companies. The investment climate has also deteriorated further, according to Pasch.
Over-regulation is becoming a significant criticism among Bergish companies regarding location conditions in Germany. Remscheid, with a higher proportion of industry, performs worse economically than its neighbors Wuppertal and Solingen.
Despite these challenges, the sales and profit forecasts for the next 12 months remain at an unsatisfactory level. However, service providers remain optimistic about their prospects, providing a glimmer of hope in these tough times.
