German companies are becoming more cautious about cutting jobs, the ifo Institute said on Wednesday, as its monthly employment barometer edged up in October.
The index rose to 95.5 points from 95.1 points in September.
“Companies are becoming somewhat more cautious when it comes to cutting jobs,” said Klaus Wohlrabe, head of surveys at the Munich-based institute. However, he warned that the upturn still “lacks the strength for a broad expansion of the workforce.”
In the manufacturing sector, the situation deteriorated slightly compared to September, with companies anticipating further job cuts, particularly in the automotive industry.
By contrast, makers of data processing equipment and electronic and optical products are planning to hire more staff.
According to ifo, service providers are more likely to create more jobs. Confidence is also growing among temporary work agencies in light of the improved economic outlook.
In the retail sector, however, companies are still planning to reduce their workforce. A slight reduction in jobs is also on the cards in the construction sector.
Sentiment among German business executives has improved for six consecutive months, according to the institute, amid growing confidence in the economic outlook.
The German government expects the economy to grow by 1.3% this year, while the ifo Institute forecasts expansion of 1.4%. Such growth would mark an end to years of stagnation. Gross domestic product increased by just 0.2% in 2025, following contractions in each of the previous two years.
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