Status: 07.10.2022 09:30
Lack of materials and extreme energy costs: German industry cut production in August. The outlook for the economy in the coming months is therefore bleak.
German companies cut their production in August due to material shortages and high energy prices. Industry, construction and energy suppliers combined produced 0.8 percent less than the previous month, as announced today by the Federal Statistical Office in Wiesbaden. It is the strongest decline since March of this year, the first full month since the start of the Russian invasion of Ukraine.
Economists interviewed by Reuters had expected a drop of just 0.5% after production stagnated in July. For the year as a whole, it increased by 2.1% in August.
Particularly strong decline in energy-intensive branches
According to statisticians, production continues to be hampered by the severe shortage of primary products. There are several reasons for this: “Supply chains disrupted due to the war in Ukraine and the continuing disruptions caused by the Crown crisis continue to cause problems in order processing.”
The industry alone cut its emissions by 0.1 percent in August. The shallow water of the Rhine also played a role. “In chemical manufacturing and coke oven and mineral oil processing, August production was likely affected by, among other things, restrictions on the carriage of goods on inland waterways due to severe low tide,” he said. law.
In energy-intensive industrial sectors such as the steel industry, which is particularly affected by the current high energy prices, production fell even more sharply to 2.1 per cent. Even in construction, production fell by 2.1%, while energy production fell by 6.1%.
“Everything points to a recession”
“The continuing great uncertainty about the course of the war in Ukraine and the virtually dried-up gas supplies from Russia have dampened the activities in the sector,” the Federal Ministry of Economy commented on the data. “Given the decline in orders and the relaxed mood in companies, the outlook for industrial activity in the coming months is bleak.”
Economists have made similar comments on the decline in production. “Manufacturing remains a long-term patient, so it delights at a lower level. It will continue to do so in the coming months, as core loads remain,” commented Alexander Krüger, chief economist at the private bank Hauck Aufhäuser Lampe. The question of how long will companies hold out is growing stronger. “If help doesn’t arrive soon, the lights go out, especially in small and medium-sized businesses.”
“With the decline in August, industrial production continues its moderate downward trend,” said Jörg Krämer, Commerzbank’s chief economist. In the energy-intensive sector, production again decreased significantly, which had an even greater impact on overall production in the fourth quarter. The ifo business climate is already at the level of recession. He is therefore certain: “Everything portends a recession in the winter months”.
