EuropeOn’s German member ZVEH reports that the slight market downturn, which had already become evident in spring, continues in the ZVEH’s autumn business survey. Important economic indicators such as order backlogs, the business climate index, and business expectations are showing a downward trend. Similarly, the typical growth in employment expected for autumn is also missing.
The German economy has already been afflicted by poor performance and, depending on the industry, significant losses. In spring, electrical trades were still able to distance themselves from this negative trend despite existing order declines. However, the autumn business survey conducted from September 16 to 27 shows that the outlook has worsened further within the electrical trades. However, there is no economic slump yet, as 54.1% of respondents still report their business situation as good (spring 2024: 58.8%). Meanwhile, 37.1% assess it as “satisfactory” (spring 2024: 34.0%), and 8.8% classify it as “poor” (spring 2024: 7.3%).
Weaker Growth of Orders
One reason for the increasingly pessimistic assessment is the growth of orders over the past six months. Approximately 30% of businesses reported declines in their orders across all client categories (private, public, and commercial). The autumn survey also reveals that the traditionally high order backlogs in the sector have significantly decreased. The average order backlog is currently only 13.8 weeks, down from 15.2 weeks six months ago. Additionally, in spring 2024, 28.8% of respondents reported having order volumes exceeding four months; now this figure has dropped to just 22.1%—a decrease of 6.7 percentage points.
Decrease in Vacancies
The number of companies reporting open positions has also declined, falling from 57.5% in spring to 52.0%. This indicates a steady decline since the peak value of 66.4% in spring 2023, suggesting that businesses are holding back on hiring new staff due to declining orders.
For the first time in five years, the change in employee numbers shows no positive trend in the autumn survey. Typically, companies report growth in autumn due to newly hired apprentices. However, now an equal number of companies (20% each) reported increases and decreases in employee numbers over the last six months. The balance of increases and decreases in spring was significantly negative at minus 8.5 percentage points, indicating a negative employment trend over the past twelve months.
Business Climate Index: Solid Despite Decline
Given the overall declining developments, it is not surprising that the business climate index has also dropped, falling from 75.7 to 72.7 points. “This still represents a solid value and shows that electrical trades are relatively resilient despite economic turbulence. However, it also means that the downward trend is solidifying,” says Alexander Neuhäuser, Managing Director of the Zentralverband der Deutschen Elektro- und Informationstechnischen Handwerke (ZVEH). “Since it is unlikely that the economic situation will turn around in the coming months, we should make the electrical trades weatherproof.” Neuhäuser notes that only 14.7% of surveyed companies expect an improvement in their business situation (spring 2024: 15.5%), while 26% anticipate a deterioration (spring 2024: 23.5%).
The association of electrical contractors particularly emphasizes the responsibility of policymakers to support growth opportunities, such as those offered by sector coupling. Solutions could include a reform of energy prices, adherence to the CO2 pricing path, removal of network bottlenecks, and eliminating investment barriers. ZVEH Managing Director Neuhäuser states, “Clear signals must come from Berlin to help eliminate investment hesitancy in the private sector. Otherwise, it cannot be ruled out that next year we will see more significant declines even in the otherwise relatively stable electrical trades.”
Development of Future Technologies: Businesses Rely on Synergies
The autumn business survey also included a supplementary question about the development of future technologies. Notably, compared to the autumn survey of 2023, the proportion of businesses that installed charging stations in the past six months dropped by 10.5 percentage points (autumn 2023: 69.6%; autumn 2024: 59.1%). This decline is likely due to a general decrease in demand for charging stations after many funding programs ended. The development can thus be attributed to fluctuating political frameworks.
In contrast, the installations of heat pumps saw an increase in the proportion of businesses installing them, rising by 4.9 percentage points despite a drop in sales caused by the “Heating Law” (from 40.7% in autumn 2023 to 45.6% now). As a result of these developments, a stronger concentration of businesses engaging in “future technologies” is noticeable. On one hand, the number of businesses providing services in all areas (photovoltaics, electromobility, and heat pumps) is increasing (spring 2024: 24.7%; autumn 2024: 26.2%). On the other hand, there are also more businesses that were not active in any of these areas (spring 2024: 19.7%; autumn 2024: 23.6%).
