Tuesday, November 9th, 2021
“Stuttering Industrial Production”
German export figures surprisingly fall
Despite full order books, German industry is currently having to cut production. The reason: there are no preliminary products such as semiconductors. In addition, there is the reverberation of the corona crisis at the important trading partner China. These factors have a negative impact on export figures.
Persistent material shortages and disrupted supply chains led to a decline in German exports in September for the second month in a row. These fell by 0.7 percent compared to the previous month, as the Federal Statistical Office announced. That comes as a surprise: Economists surveyed by Reuters had expected stagnation. In August there had already been a decline of 0.8 percent – the first after 15 consecutive monthly increases.
Despite full order books, German industry recently had to cut back its production significantly because of the lack of important intermediate products such as semiconductors. In contrast, imports grew in September for the second month in a row, if only by 0.1 percent. “The stuttering industrial production is now also having a negative effect on exports,” said VP Bank’s chief economist, Thomas Gitzel. The current output in industry is not enough to keep exports growing.
“The lack of material is now showing signs of skidding in exports,” added Gitzel. As long as there are not enough materials available for production, there will be no soaring exports. “A growth spurt will only occur when supply chains function more smoothly,” also predicted the chief economist of Bankhaus Lampe, Alexander Krüger. “But that will take some time.”
The situation in China is affecting trade
In addition, the demand from China has recently decreased. The most important German trading partner is taking rigorous action against new corona infections, which repeatedly leads to plant closings or interruptions at large trading ports. In addition, the upswing in the People’s Republic is regularly slowed down by power outages.
In total, German companies sold goods worth 117.8 billion euros abroad. Compared to September 2020, this is an increase of 7.1 percent. Exports to the most important export customer, the USA, grew by 16.2 percent to 10.8 billion euros, while those to China shrank by 0.2 percent to 8.5 billion euros. Foreign business with EU countries increased by 9.2 percent to 64.6 billion euros.
The German Chamber of Commerce and Industry (DIHK) expects German exports to grow by 7.5 percent this year. In 2022 there should be a similarly strong plus of 7.0 percent. There was a significant decrease in the Corona year 2020.