The general mood on the labour market is worse than during the coronavirus pandemic in 2020, which marked an all-time low. Employment is at its lowest level in four years, while the number of insolvencies is rising at a double-digit rate.

The decline in orders and the economic crisis have led companies to scale back their hiring plans to a degree unseen in four and a half years. The employment barometer fell to 92.4 points in December from 93.3 points in November, according to a survey published on Thursday by the Munich-based Ifo Institute. At the same time, the number of insolvencies continues to rise, according to the Federal Statistical Office.

With its seventh consecutive decline, the Ifo barometer has reached its lowest level since mid-2020, when the coronavirus crisis caused widespread economic disruption. „Fewer and fewer companies are hiring new employees, while the number of firms continually downsizing is increasing,” said Klaus Wohlrabe, an analyst at Ifo.

The metal industry, car manufacturers, and their suppliers are among the hardest hit. The retail sector is also planning more job cuts than new hires. Meanwhile, the negative trend of recent months has continued in the services sector.

The number of regular insolvency filings rose by 12.6 percent in November compared to the same month last year. According to preliminary data from the Federal Statistical Office, the annual growth rate of insolvencies has been in the double digits since June 2023, with only one exception.

Leading economic institutions forecast that Germany’s economy will contract for the second consecutive year in 2023. At best, a slight recovery is expected by 2025. According to the Federal Ministry for Economic Affairs’ most recent monthly report, no sustainable economic turnaround is yet in sight.