Ifo index falls surprisingly: severe delivery bottlenecks slow down industry


Ifo index falls surprisingly
Heavy delivery bottlenecks slow down industry

The shortage of chips is hitting the German economy harder than expected. Two out of three companies are now reporting delivery bottlenecks that affect other industries. The summer and vacation euphoria in the catering industry can also be followed.

The mood in the German economy surprisingly clouded over in July. the Ifo index for the business climate fell by 0.9 points to 100.8 points, as the Munich Institute announced. The leading German economic barometer, which is based on a survey of around 9,000 companies, fell for the first time since the beginning of the year. Analysts were surprised by the development. They had expected an increase to 102.5 points on average.

The assessment of future business is decisive for the decline. “Delivery bottlenecks for preliminary products and worries about increasing numbers of infections are burdening the German economy,” says Ifo President Clemens Fuest. The managers judged their situation a little better than before. The business outlook for the next six months, however, was assessed less optimistically.

64 percent of industrial companies with bottlenecks

Ifo expert Klaus Wohlrabe provides a more detailed insight. According to him, almost 64 percent of industrial companies are now complaining about bottlenecks in preliminary products such as chips. “That now has an impact on other industries,” says Wohlrabe. 60 percent of wholesalers and more than 42 percent of retailers would also complain of problems. “It’s like a domino effect.”

The Ifo expert assumes that the issue will remain in the second half of the year. “We had thought that the delivery bottlenecks were only a temporary problem, but they are likely to last a little longer,” said Wohlrabe. The industry is in good shape and orders have even increased. “But not as much can be produced as one could actually do.” The export economy in particular is well positioned. Companies were also looking for more and more employees, especially industry.

Holiday euphoria vanished

According to Wohlrabe, the optimism of consumer-related service providers such as tourism and the hospitality industry, which recently benefited from the end of many corona restrictions, has also suffered a damper. “The euphoria is gone here,” he says. The reason is the increasing fear of a fourth corona wave.

For the year as a whole, the IHS Markit institute recently predicted record growth in the German economy in its survey of hundreds of companies. Economists surveyed by the Reuters news agency also expect gross domestic product (GDP) to increase by 2.0 percent in the second quarter. According to the Bundesbank, the pace of growth is likely to accelerate further in the summer, so that the economy can reach its pre-crisis level in the current third quarter. At the beginning of the year, GDP had shrunk by 1.8 percent due to the corona.

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