The sentiment among managers in Germany has reached a catastrophically low level. The most important leading indicator, the Ifo Business Climate Index, fell to 74.3 points in April, after 85.9 points in March. This is the lowest measured value in history – there has never been a greater decline.

“This is mainly due to the massive worsening of the current situation”, said the Ifo President, Clemens Fuest.

Moreover, companies have never been so pessimistic about the months ahead. “The Crown crisis has hit the German economy at full force”, said Clemens Fuest. Now the crisis is hitting all branches. Even a major German sector, such as the construction industry, is now worried about the future. So far, along with consumption, it has been the pillar of the economy.

That the effects of shutting down production for the coronavirus would severely affect companies in April was made clearer every day after Easter. On Thursday, Ifo announced that the crisis has hit the labor market: in industry and service providers, one in five companies surveyed by Ifo intends to lay off employees or not extend temporary jobs.

In the retail trade, this share is 15%, while for construction it is 2%, which has so far been slightly affected by the stagnation. In almost all industries, more than 40% of companies plan to postpone investments – and 31% are in construction.

The IHS Markit’s Purchasing Managers’ Index (PMI) also fell to a record low on Thursday. In this survey, among managers, 75% of service providers and almost as many managers from industrial companies claim that their sales have shrunk significantly. Sales of service providers have fallen more than ever in the 20-year history of this survey.

“Both internal and external demand have collapsed”, wrote IHS Markit economist, Phil Smith. More jobs were cut in the services sector than in the midst of the recession in the April 2009 financial crisis, and in the industry, staff contraction accelerated – despite part-time work.

In any case, leading economists are beginning to further reduce their projections of the German economy for 2020. The head of the government’s economic advisers, Lars Feld, now expects gross domestic product (GDP) to shrink by at least five and a half percentage points in 2020. The economy may shrink more than the recession in the financial crisis of 2009.

Three and a half weeks ago, when the Council of Economic Experts presented a special report on the pandemic to the Minister of the Economy, Peter Altmaier, the worst-case scenario was -5.5%. However, the IMF expects German GDP to collapse by seven percent in 2020.

Even among major economic research institutes, which predicted -4.2% for 2020 in their joint diagnosis two weeks ago, many now expect the decline to be at least -5%. Therefore, markets are eagerly awaiting which recession forecast the government will commit to next week.