German firms’ confidence keeps falling on supply chain woes

Author: Jonathan Lopez

2021/10/25

LONDON (ICIS)--Supply problems continue to weigh on German corporates' confidence and are hampering the recovery post-pandemic, the Ifo institute said on Monday.

“Sand in the wheels of the German economy is hampering the recovery,” said Ifo as its Business Climate index fell in October once again.

Capacity utilisation at industrial plants fell sharply in October, down 2.1 percentage points to 84.7%, as firms struggle to source materials on the back of supply bottlenecks.

Most economic sub-sectors posted falling rates of confidence among companies, and sentiment has “has clouded over” as the global supply chain woes are likely to take months to resolve

The ifo Business Climate Index fell from 98.9 points in September to 97.7 points in October (see graphs below).

“Scepticism is increasingly evident in expectations. Companies’ assessments of their current situation are also less positive. Supply problems are giving businesses headaches. Capacity utilisation in manufacturing is falling,” said Ifo’s president Clemens Fuest.

“In manufacturing, the Business Climate Index fell once again. Companies are somewhat less satisfied with their current business. Expectations are also clouding further.”

A bright spot for industrial players in Germany was the petrochemicals-intensive construction sector, which earlier in the year faced its own supply chain woes and lack of materials which seem to be improving now.

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