Southern Thuringia's craft sector faces third year of steep decline
Southern Thuringia's Craft Sector Remains Under Pressure as Downward Trend Solidifies
The economic situation for craft businesses in Southern Thuringia remains strained, with the years-long downward trend further entrenched, according to the latest findings.
These are the results of the regular spring economic survey conducted by the Southern Thuringia Chamber of Crafts among its member companies. For the third consecutive year, businesses' assessments of their current situation have declined, now reaching the lowest level since the global financial crisis of 2009.
The number of registered craft enterprises is also shrinking. Last year, it fell by 1.6 percent.
Order books remain weak, sales are sluggish, and capacity utilization is low, while companies face rising costs. Meanwhile, international conflicts are amplifying economic uncertainty.
Unpredictable cost burdensâparticularly from high energy pricesâcontinue to pose a significant risk to economic activity for months to come. Additionally, the lack of clear policy decisions and ongoing debates about potential tax increases are fueling further uncertainty, undermining entrepreneurial confidence.
With no growth stimuli in sight and persistent instability, there is little prospect of improvementâif anything, conditions may worsen. Southern Thuringia's craft sector urgently needs reliable economic policy frameworks to reverse this downward spiral.
Only 32 percent of surveyed businesses now rate their current situation as good (down from 34 percent last year). Some 41 percent describe it as satisfactory (compared to 44 percent previously), while 27 percent view their circumstances as poor (up from 23 percent last year).
The outlook is particularly bleak in the construction tradesâa key regional sectorâas well as among service providers and crafts serving commercial clients.
Expectations for the near future remain subdued: just nine percent of businesses anticipate improved conditions in the coming quarter, while 17 percent expect further deterioration.
Order intake has continued to decline. A mere seven percent of craft businesses report an increase in orders (down from 13 percent last year). Half of all companies (53 percent, up from 49 percent) see no change from the already low base, while 40 percent (compared to 38 percent last year) report a further drop in orders.
Only five percent of respondents rate their order backlog as above average, whereas 36 percent consider it below average.
Capacity utilization is similarly weak: just four in ten businesses operate at over 80 percent capacity. More than one in five (21 percent) report using no more than half of their available capacity, with construction firms faring the worst.
Looking ahead to the next quarter, businesses do not expect any significant improvement in order levels. Some 61 percent anticipate stable order intake, 16 percent foresee an uptick, and 23 percent brace for further decline.
Sales trends remain weak and have not recovered compared to last year: 44 percent of craft businesses recorded losses in the first quarter, while only 11 percent managed to increase revenue.
Projections for the coming months are slightly more optimistic. Roughly one in three construction firms, automotive workshops, and food trades expect higher sales.
Across sectors, 23 percent of businesses anticipate rising revenue, while 28 percent predict further declines. However, given the poor order situation in many areas, expected sales growth may partly reflect higher price expectations rather than increased demand.
Cost pressures have intensified once again. Purchase prices for energy, materials, and raw materials surged in the reporting period, particularly for energy and fuels.
A striking 85 percent of surveyed businesses (up from 73 percent last year) report higher expenses in this area. As a result, 49 percent of companies (compared to 43 percent last year) have raised prices for their products and services.
The labor market for skilled trades in southern Thuringia continues to be defined by a shortage of qualified workers and the growing retirement of long-serving employees: In the first quarter of 2026, once again, more companies reduced their workforce than expanded it.
Only five percent of businesses managed to hire additional staff, while 80 percent maintained their current employment levels and 15 percent reported a decline in headcount.
Investment willingness remains at a very low level. Just seven percent of surveyed business owners in southern Thuringia increased their investments, while 44 percent cut back.
The share of investors stood at 32 percent, with the average investment amounting to roughly âŹ20,000. Notably, the total investment sum is concentrated in a few relatively large investments alongside a high number of much smaller ones.
According to Mike Kämmer, president of the regional Chamber of Crafts, the persistent weakness in business conditions shows that southern Thuringia's skilled trades sector is "backed into a corner."
Given the precarious situation, he is calling on policymakers to deliver a clear vision for the future, tangible relief on energy and tax costs, and targeted growth incentives to prevent further erosion of the sector's foundation.
While crises can also present opportunities for innovative products and processes, Kämmer warns that unpredictable financial burdens, overly complex regulations, and political indecision must not stifle entrepreneurial initiative before it can take root. At the same time, he stresses that necessary relief measures must be implemented with care and proportion.
The struggling construction trades, in particular, now need signals of confidence. "The construction sector is key to affordable housing and greater energy efficiency," Kämmer concludes. "What we need hereâabove allâis planning certainty, not vague promises, so that our customers will invest again and our businesses can take active steps to counter the skills shortage."
Only then, he argues, can the region overcome its weakest business conditions in 17 years and secure a future for its local trades.
