German Business Confidence Declined on Supply Bottlenecks

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On Tuesday, German business confidence declined for the fifth month in November as supply bottlenecks persisted. 

Accordingly, it lowered to 96.50 from the previous figure of 97.70. At the same time, it also missed the market estimate of 96.60. 

In addition, Business expectations tumbled to 94.20 from the October data of 95.40. Then, it came lower than the forecasted 95.00. 

Moreover, the recent spike in coronavirus infections weighed down the growth outlook for Europe’s largest economy. 

Consequently, company executives remained unsatisfied with their present business situation. In line with this, they had pessimistic expectations for the next six months. 

Correspondingly, German manufacturers scaled back their production due to the scarcity of raw materials and intermediate goods such as microchips. 

In the stated case, experts now forecasted a plunge in the overall economic output for the fourth quarter this year.

Subsequently, economists strengthened the anticipation by emphasizing that the German economy will stagnate in the current quarter amid the persevering supply crunch.

The lack of goods and labor and the stricter health restrictions halts the economic recovery.

Meanwhile, the Institute for Economic Research (IFO) figures contrasted with the purchasing manager survey. 

Accordingly, the German manufacturing purchasing managers index (PMI) climbed to 57.60 from the estimated 56.90. 

Likewise, the services PMI edged up to 53.40, significantly higher than the expected 51.50.

These numbers suggested that the growth in Germany’s private sector increased slightly in November despite the supply crunch. 

German Government Considers Full-COVID Lockdown

At present, Germany considers full-COVID lockdown to halt the spike in COVID cases and protect hospitals from reaching capacity limits.

Consequently, most states have already imposed restricted access to public spaces like bars, restaurants, movie theaters, and museums. 

Then, German officials planned for compulsory vaccinations as the country has one of the lower vaccination rates in Europe. There are only 68.00% of its population who are fully vaccinated.

However, rising vaccine hesitancy and the rapid spread of the highly infectious delta variant make the task far harder.

Eventually, tighter restrictions would pull down the hospitality and tourism sectors. 

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