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IFO survey shows growth: Industry can hardly save itself from orders

IFO survey shows growth
Industry can hardly save itself from orders

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German industry has so many orders that it could continue producing for another four and a half months. However, this is not only due to the high demand for German industrial goods, as the IFO Institute has established.

According to a survey, German industry is sitting on a record high order mountain. Even without a single new order, it could continue to produce for another 4.5 months, according to the evaluation of the April IFO business survey. In the previous survey in January, it was 4.4 months.

For comparison: the long-term average order reach is 2.9 months. “The increase in reach is now only small,” said the head of the IFO economic forecasts, Timo Wollmershäuser. “This indicates that the flow of new orders is gradually weakening.”

The Federal Statistical Office had also recently measured a record range. “The backlog of orders not only reflects the high demand for German industrial goods in recent months, but also the difficulties faced by companies in processing existing orders promptly due to the lack of important preliminary products and raw materials,” explained Wollmershäuser.

Because of the Russian war against Ukraine, the car industry complained about a lack of wiring harnesses. If the supply bottlenecks are resolved in the coming months, production in German industry could take off. “That would then give a strong boost to economic output,” said economic expert Wollmershäuser.

Delivery bottlenecks are getting worse

“However, there are currently many indications that the supply bottlenecks are getting worse, especially as a result of the rigorous lockdowns in China, from where Germany recently got 15 percent of its imported primary products.” There, for example, container ships are piling up in front of the huge commercial port of Shanghai after the metropolis was put into a week-long corona lockdown.

The range of orders in the automotive industry (manufacturers and suppliers) is particularly large at 7.4 months. According to the IFO figures, it is also particularly high in mechanical engineering (6.5 months) and among manufacturers of data processing equipment (6.3 months). Accordingly, orders from textile manufacturers are the shortest at 1.7 months.

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