German industrial production slumps on supply chain disruption By Reuters

German industrial production slumps on supply chain disruption By Reuters

© Reuters. FILE PHOTO: Staff wear protective masks at the Volkswagen assembly line in Wolfsburg, Germany, April 27, 2020. Swen Pfoertner/Pool via REUTERS/File Photo

By Paul Carrel and Rene Wagner

BERLIN (Reuters) -German industrial output suffered its steepest drop in August since April last year, due to supply chain disruptions that are holding back growth in Europe’s biggest economy and hitting the auto sector particularly hard, official data showed on Thursday.

The Federal Statistics Office said industrial output fell by 4.0% on the month after an increase of 1.3% in July. A Reuters poll had pointed to a decline in August of 0.4%.

“Manufacturers continue to report production constraints due to supply shortages of intermediate products,” the office said in a statement.

Production of cars and car parts fell by 17.5% on the month.

German car companies are struggling to meet a post-pandemic surge in demand since the start of the year, due to a lack of microchips and other intermediate products.

Carmaker BMW said its group deliveries were down 12.2% in the third quarter, hit by the microchip crunch.

On Tuesday, Daimler (OTC:) truck boss Martin Daum said he expected the global chip shortage to continue to affect production next year.

“We will definitely deliver less than we could have sold, and that also applies to next year,” he said, adding that it was impossible to say how big the shortfalls would be.

“It’s a fight for every chip,” he added.

Official data released on Wednesday showed German industrial orders fell more than expected in August on weaker demand from abroad following two months of unusually strong gains due to major contracts.

However, the Munich-based Ifo economic institute said separately that its survey of production expectations rose in September.

“Order books are still full, only materials bottlenecks are causing problems at the moment and dampening production plans somewhat,” Ifo economist Klaus Wohlrabe said.

Thomas Gitzel, economist at VP Bank, said “if the flow of materials gets going again, the conditions are in place for a strong upturn in industrial activity.”

Carsten Brzeski, at ING, said that for now it looked like that upturn would “come rather later than sooner.”

Separately, prices for newly built residential buildings rose by 12.6% on the year in August, their biggest rise since November 1970. German consumer prices rose by rose by 4.1% year-on-year last month.

Jens-Oliver Niklasch, economist at LBBW, commented: “Supply shortages, high energy prices and production stoppages: a toxic brew that already smells faintly of stagflation.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source link

Leave a Reply