Production in 2021 will remain well below the pre-crisis level

Created: 2022-02-07 11:11 am

By: Patricia Huber

Material bottlenecks such as the lack of semiconductors are particularly difficult for the industry.

© Julian Stratenschulte/dpa

The corona pandemic is still leaving its mark on German companies.

Also in 2021, the companies could not reach the pre-crisis level in production.

Berlin - Despite bulging order books, the production of German companies plagued by material shortages clearly missed their pre-crisis level last year.

Industry, construction and energy suppliers together produced 3.0 percent more than in the first Corona year 2020, as the Federal Statistical Office announced on Monday.

However, production was still 5.5 percent below the pre-crisis year of 2019. However, surveys signaled a gradual resolution of the supply bottlenecks, as the Federal Ministry of Economics emphasized.

"In combination with the high order backlog of the companies, this indicates a dynamic development of the industrial economy in the coming months."

Lack of raw materials slows industrial growth

Economists see it that way too.

"The basic prerequisites for a strong jump in industrial production could hardly be more favourable," said the chief economist at VP Bank, Thomas Gitzel, in view of the thick order books.

"There needs to be a sustainably better supply of preliminary products and raw materials so that industrial production can finally do what it is actually supposed to do - namely grow strongly."

In December, industry, construction and energy suppliers together produced 0.3 percent less than in the previous month.

Economists surveyed by Reuters, on the other hand, had expected an increase of 0.4 percent.

In November, production had grown by a revised 0.3 percent, after a minus of 0.2 percent had initially been determined.

In 2021 as a whole, production was 3.0 percent higher than in the first Corona year, 2020, but it was still 5.5 percent lower than in the pre-crisis year of 2019.

Auto industry picked up again

However, there is also a glimmer of hope: Industry alone expanded its production by 1.2 percent in December and thus for the third month in a row.

This means that “a positive development is visible”, explained the Federal Ministry of Economics.

However, there is no clear picture within the industry.

"As expected, automotive production, which was hit so hard last year, picked up sharply towards the end of the year, while other flagship sectors such as mechanical engineering or the chemical industry had to lose feathers," said DekaBank economist Andreas Scheuerle.

At the end of the year, utilities generated 0.7 percent less than in the previous month, while construction output even fell by 7.3 percent.

The latter may have been at least partly due to the weather, said Scheuerle.

The German industrial companies are currently sitting on bulging order books.

In the past few months, however, the orders could not be processed as usual - for example due to acute bottlenecks in preliminary products such as microchips, which are slowing down the car industry, for example.

The shortage of materials in industry eased somewhat at the beginning of the year: 67.3 percent of companies complained about bottlenecks and problems in procuring preliminary products and raw materials, as the Ifo Institute found out in its survey.

In December it was still around 82 percent.

"It is not yet clear whether this is a trend reversal," said Klaus Wohlrabe, head of the Ifo surveys.