German electrical industry sentiment climbs to 24.8 points in September Ifo survey

Surge across electrical sector indicators

Business confidence across the German electrical industry improved notably in September 2026, according to the monthly survey released on Thursday by the Munich-based Ifo Institute. The sector business climate index increased by 8.3 points to reach 24.8 points, up from 16.5 points recorded in August 2026. This assessment represents the highest confidence reading for the industry in more than three years. The overall increase was led by a sharp upward revision in how companies evaluate their current operational state. The index tracking the current business situation rose by 14 points, moving from 15 points in August to 29 points in September, nearly doubling within a single month. Business expectations for the next six months also showed gains across the surveyed cohort, though this forward-looking indicator rose at a more moderate pace than the current situation index.

Digital demand separates sector from wider industry

The positive sentiment distinguishes electrical equipment manufacturers from other German industrial sectors that remain burdened by sluggish client demand. The branch covers manufacturers producing data processing equipment, electronic components, and optical goods. Growth in the sector is supported by ongoing investments in corporate digitalization and artificial intelligence applications. Demand in September was described by the Ifo Institute as exceptionally positive, resulting in a considerable influx of new orders. These incoming contracts allowed manufacturing firms across the sector to report satisfaction with their total order backlog for the first time in an extended period.

Klaus Wohlrabe, head of surveys at the Ifo Institute, described how the branch is diverging from the broader manufacturing landscape.

The electrical industry is increasingly developing into an economic locomotive within German industry. While many industrial sectors are still struggling with weak demand, business here is already running much better.

Expansion plans and foreign trade expectations

Buoyed by the inflow of new orders, electrical manufacturers are setting expansively oriented production plans for the immediate future. Multiple companies surveyed indicated that they intend to ramp up manufacturing operations and expand factory output across facilities over the coming months. In addition to domestic demand, businesses reported strengthening export expectations. While several other German industrial branches project contracting sales abroad, the electrical sector anticipates growth impulses from international markets.

Component shortages and upward price adjustments

The swift recovery in orders has introduced operational difficulties for manufacturers attempting to fulfill delivery commitments. Around 40% of enterprises in the electrical sector reported shortages of critical intermediate inputs, specifically naming components such as semiconductors. These supply constraints are emerging as the main operational hurdle for firms looking to scale assembly lines. In response to these input frictions and high customer demand, a growing number of companies stated plans to increase their selling prices in the near term.

Klaus Wohlrabe noted that component availability now poses a greater operational hurdle than customer acquisition.

Demand is currently not the problem. A supply of intermediate products, on the other hand, could become a bottleneck.