Full order books: German industry: Orders are increasing sharply

German industry is benefiting from increased demand as a result of the global economic recovery. The order books are fuller than they have been for years.

Thanks to bulging order books, German industry can hope for a strong upswing in the current year. Some economists expect a real boom, provided the supply bottlenecks ease.

Last year, orders in the manufacturing sector increased by 17.8 percent compared to the Corona crisis year 2020, as the Federal Statistical Office announced on Friday in Wiesbaden. The level of the pre-crisis year 2019 was exceeded by 9.3 percent. The order books are as full as they have ever been since the early 1960s, said Commerzbank chief economist Jörg Krämer.

“Now it is important that the supply bottlenecks ease in order to allow industrial production to recover,” said Krämer. He expects a thorough easing in early summer. “Then the German economy should recover strongly.”

Due to delivery bottlenecks and a lack of raw materials and preliminary products, many companies cannot process orders at the usual pace. This dampens production and puts a strain on business. Sales in German industry last year were 5 percent higher than in the previous year after calendar adjustment. However, the level of the pre-crisis year was undershot by 5.5 percent.

“Boom” expected

Thomas Gitzel, chief economist at VP Bank, expects a “real boom” as soon as the flow of materials is sufficient again. Not only do the orders that have been left behind have to be processed, but the warehouses that have been swept empty also have to be refilled. “In the post-corona recovery, the best months are still ahead of the industry.” Gitzel sees the omicron wave of the corona virus as a risk, which could exacerbate the delivery difficulties.

According to an Ifo survey, the situation had recently eased somewhat. According to this, in January 67.3 percent of the companies reported bottlenecks and problems in the procurement of preliminary products and raw materials. In December it was still 81.9 percent. However, it is not yet foreseeable “whether this is a trend reversal,” said the head of the Ifo surveys, Klaus Wohlrabe, recently.

Less orders from abroad

At the end of 2021, strong domestic demand pushed orders. Overall, the (real) order intake adjusted for price increases in December rose by 2.8 percent compared to the previous month. Compared to December 2020, the companies recorded an increase of 5.5 percent. However, orders from abroad fell by 3 percent compared to the previous month.

The Association of German Chambers of Industry and Commerce (DIHK) is concerned about the weakness of foreign business. “The gradual decline in orders from abroad since the middle of the year shows that the global economy is losing momentum and German companies have to fight for their competitive position,” said DIHK economic expert Jupp Zenzen.

Source: Stern

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