German companies have grown markedly more cautious about hiring and the majority are cutting jobs as the labour market weakens, according to the latest ifo Employment Barometer. The barometer dropped to 91.9 points in December from 92.5 in November, marking its lowest level since May 2020 and reflecting broad-based declines in employment expectations across sectors.
The survey, based on roughly 9,500 responses from firms in manufacturing, construction, retailing, wholesaling and services, found that most companies plan further staff reductions through early 2026. Industrial firms, especially clothing manufacturers, are among those most intent on cutting headcount, while service providers remain reluctant to hire. In the trade sector, employers also expect to reduce payrolls in the coming months. By contrast, the construction industry’s hiring outlook is roughly balanced.
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“In 2025, we experienced gradual job cuts, especially in industry,” said Klaus Wohlrabe, head of surveys at the Munich-based Ifo Institute, adding that Germany’s weak economy continues to slow the labour market. The falling employment barometer underscores persistent economic challenges even as other indicators, such as export expectations, show only modest improvements.
