German industrial production slumps on supply chain disruption

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Workers put on protecting masks on the Volkswagen meeting line in Wolfsburg, Germany, April 27, 2020. Swen Pfoertner/Pool by way of REUTERS/File Picture

  • Output falls 4.0% m/m, steepest drop since April 2020
  • Manufacturing of automobiles and automotive elements down 17.5%
  • Economists see robust upturn if bottlenecks clear

BERLIN, Oct 7 (Reuters) – German industrial output suffered its steepest drop in August since April final 12 months, because of provide chain disruptions which are holding again development in Europe’s greatest economic system and hitting the auto sector significantly arduous, official knowledge confirmed on Thursday.

The Federal Statistics Workplace mentioned industrial output fell by 4.0% on the month after a rise of 1.3% in July. A Reuters ballot had pointed to a decline in August of 0.4%.

“Producers proceed to report manufacturing constraints because of provide shortages of intermediate merchandise,” the workplace mentioned in a press release.

Manufacturing of automobiles and automotive elements fell by 17.5% on the month.

German automotive corporations are struggling to satisfy a post-pandemic surge in demand for the reason that begin of the 12 months, because of a scarcity of microchips and different intermediate merchandise.

Carmaker BMW mentioned its group deliveries have been down 12.2% within the third quarter, hit by the microchip crunch.

On Tuesday, Daimler truck boss Martin Daum mentioned he anticipated the worldwide chip scarcity to proceed to have an effect on manufacturing subsequent 12 months.

“We will certainly ship lower than we might have offered, and that additionally applies to subsequent 12 months,” he mentioned, including that it was not possible to say how large the shortfalls could be.

“It is a combat for each chip,” he added.

Official knowledge launched on Wednesday confirmed German industrial orders fell greater than anticipated in August on weaker demand from overseas following two months of unusually robust beneficial properties because of main contracts.

Nevertheless, the Munich-based Ifo financial institute mentioned individually that its survey of manufacturing expectations rose in September.

“Order books are nonetheless full, solely supplies bottlenecks are inflicting issues in the meanwhile and dampening manufacturing plans considerably,” Ifo economist Klaus Wohlrabe mentioned.

Thomas Gitzel, economist at VP Financial institution, mentioned “if the move of supplies will get going once more, the situations are in place for a robust upturn in industrial exercise.”

Carsten Brzeski, at ING, mentioned that for now it seemed like that upturn would “come reasonably later than sooner.”

Individually, costs for newly constructed residential buildings rose by 12.6% on the 12 months in August, their greatest rise since November 1970. German client costs rose by rose by 4.1% year-on-year final month.

Jens-Oliver Niklasch, economist at LBBW, commented: “Provide shortages, excessive power costs and manufacturing stoppages: a poisonous brew that already smells faintly of stagflation.”

Reporting by Paul Carrel and Klaus Lauer
Enhancing by Riham Alkousaa, Maria Sheahan and Peter Graff


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