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By Annett Kschieschan
Dresden. Alongside some good news, there has been mainly bad news from the economy recently: job cuts, short-time working, migration and - the number of insolvencies is rising. Against this backdrop, many companies are pessimistic about the coming months. A look at the latest Saxony Barometer shows this.
Low in the manufacturing industry
After a slight improvement, the mood here has fallen noticeably again. The same applies to the number of orders in the sector. Manufacturers of capital goods are particularly affected. Weak demand in the automotive industry is also keeping expectations for the near future at a low level. Every third euro in Saxony is earned in vehicle construction. The fear is particularly great here. "Rising wage costs and falling incoming orders are already leading to redundancies and short-time working in some companies," says Thomas Schulz, authorized signatory at Creditreform in Dresden. A glimmer of hope is the semiconductor industry, where over 90,000 people are expected to find work by 2030. The current figure is around 76,000.
Service providers remain skeptical
The service sector also remains skeptical, postponing investments, especially in the corporate sector, and stopping them altogether. Expectations for the future are rather pessimistic. Here too, the rising number of insolvencies and the generally poor economic situation are having a strong impact on sentiment.
Some hope in retail
For the first time in many months, however, retailers are a little more optimistic about the future. The business climate index has risen slightly - as has the sector's turnover compared to the previous year. However, contrary to the national trend, Saxon retailers are still very worried about the future. "When economic development is uncertain, consumer confidence traditionally falls and the savings rate rises," Thomas Schulz continues.
Fewer building permits
The number of building permits issued in the new federal states fell by 31.5 percent in the first half of the year, while the turnover of construction companies in the Free State fell by 4.5 percent. The business climate index for the construction industry remains unchanged and not very hopeful. "While the construction industry nationwide is struggling very hard with company closures, with an increase of 28 percent, the construction industry in Saxony only recorded an increase in insolvencies of around three percent," says Thomas Schulz. The "significant reduction in building permits" will further exacerbate the situation on the housing market, particularly in Dresden and Leipzig, as a result of rising demand and lower supply. The local authorities could counteract this by making inexpensive building land available and scoring points with fast approval processes.
More and more insolvencies
The situation remains difficult. According to Creditreform Dresden, a total of 11,000 companies across Germany filed for insolvency in the first two quarters of 2024 alone, an increase of 30 percent compared to the same period last year. "Insolvencies in Germany have reached their highest level for almost ten years. In the first half of 2024, companies are continuing to battle against the effects of the 2023 recession, ongoing crises and the weak economic development this year," says Thomas Schulz. This is not only having a negative impact on the business situation, but also on payment behavior. Lenders are therefore trying to avoid payment defaults by setting generous payment deadlines. This extension of deadlines can in turn trigger the very thing it is supposed to prevent: Payment defaults, as outstanding debts may no longer be able to be settled. Another problem in troubled times.
The Saxony Barometer, the economic indicator of the "Economy in Saxony", is published in cooperation with the Dresden branch of the Ifo Institute-Leibniz Institute for Economic Research at the University of Munich e.V. and the credit agency Creditreform Dresden.
