UK Edition
The post-lockdown boom in German factories is fast running out of steam as the country prepares to elect a successor to Angela Merkel.
New factory orders rocketed to their highest level since record began in 1991 in July, but forecasters warned the surge was due to a data anomaly and most of the sector actually suffered a decline.
After stripping out the volatile “other vehicle” category - which includes huge one-off sales of aircraft and ships - orders fell 0.6pc. Supply chain bottlenecks are causing huge problems in the sector as demand soars with delivery times lengthening and stocks being run down by firms.
The slowing momentum is likely to pose a headache for Mrs Merkel's successor, who will be elected later this month when she steps down after 17 years in power.
Ralph Solveen, an economist at Commerzbank, said: “There are thus increasing signs that the order boom in the industry is gradually abating.
“What is likely to be much more important for the further development of production is how long it will be hampered by the current shortage of intermediate products.”
Dwindling demand from China means volumes growth has ground a virtual standstill, he added.
Global shortages of raw materials and fast rising prices are weighing on the manufacturing sector as soaring demand and supply chain problems bite.
Production in Germany’s huge car giants, including Volkswagen, Mercedes-Benz maker Daimler and BMW, has been suppressed by a shortage of semiconductor chips.
The German economy is particularly hard hit by slowdowns in global manufacturing given its large industry. There are signs the recovery in China, a key driver of demand in the sector, is also losing momentum after the world’s second-largest economy escaped the pandemic with minimal damage.
Maddalena Martini, an economist at Oxford Economics, said: “We think that bottlenecks will continue to way out activity well into 2022 even if there is some room for them to ease over the coming months.
“Although the gain came mainly from big ticket orders, core orders also remained buoyant, pointing to a strong manufacturing outlook once supply bottlenecks dissipate.”