Ifo index continues to fall: delivery problems are a growing burden on companies

Status: 25.10.2021 1:20 p.m.

The mood in the German economy is deteriorating, and the business climate is clouding over for the fourth time in a row. In addition to industry, service providers and retailers are now increasingly suffering from bottlenecks.

The ifo business climate index fell for the fourth month in a row in October. The problems are now spreading to the service sector and retail trade.

The most important German economic barometer fell from 98.9 points in September to 97.9 in October, as the Munich Ifo Institute announced today in its survey of 9,000 executives. “Delivery problems cause problems for companies,” said Ifo President Clemens Fuest. Capacity utilization in industry is falling.

Car manufacturers less busy

According to Ifo economic expert Klaus Wohlrabe, this becomes particularly clear in the automotive industry, which lacks semiconductors, for example. Here the capacity utilization has dropped from 85.2 percent to currently only 78.2 percent.

The business climate also deteriorated in the service sector. According to the ifo survey, companies rate their current situation somewhat better, but they are “much less optimistic” about the coming months.

“Not every Christmas present available”

In the retail sector, the ifo index fell “significantly”. The dealers are noticeably less satisfied with their current business, their pessimism with a view to the coming months is increasing. Here, too, the delivery problems weigh on the mood, as the economic research institute explained.

“There are delivery problems in retail, not every Christmas present will be available,” said Wohlrabe. “The German economy is facing an uncomfortable autumn.”

Stagflation threatens

“The companies suspect that politicians will react to the rapidly increasing corona infections with new restrictions,” commented Commerzbank chief economist Jörg Krämer. Stagflation is emerging at least for the end of 2021 – a mixture of stagnating economy and rising inflation.

In the construction industry, on the other hand, the business climate again improved significantly. The companies assess the current situation somewhat better, and the expectations index increased for the sixth time in a row.

Price increases in sight

Many companies would now raise their prices, the Ifo Institute expects. In industry, for example, around every second company wants to turn the price screw. “That is a record,” said Wohlrabe. More than every second retailer is aiming for price increases.


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