German companies are growing increasingly frustrated with the economic downturn affecting the country, with more businesses complaining about a lack of manufacturing orders, a recent study has shown.
According to the Munich Ifo Institute, 39.5 percent of German manufacturers across all industries don’t believe they are receiving enough orders, a problem many are concerned will lead to a drop in profitability that could in turn affect employment.
Disillusioned businesses are on the rise, with the figure cited in April 2.6 percentage points higher than in January.
“The lack of orders is hindering economic development in Germany,” warned Ifo expert Klaus Wohlrabe as cited by Welt. “Hardly any industry is spared.”
Some industries are being affected more than others, however. Nearly two-thirds (61.5 percent) of textile manufacturers are worried about their lack of business, while over half (53.9 percent) of paper manufacturers are feeling the pinch.
A significant number of businesses in other blue-collar industries including metal production companies and chemical producers are also questioning the lack of orders, with 50.6 percent and 46.6 percent, respectively, expressing their concern.
Germany’s economic landscape is having a knock-on effect on the labor market, evidenced by a lack of requests for temporary workers. Nearly two-thirds (63.9 percent) of recruitment agencies have complained about the lack of interest from employers in using their services, with businesses more focused on finding work for their existing employees than hiking their wage costs even further.
“The generally weak economic development is reducing the demand for temporary workers,” said Wohlrabe.
Some industries, however, are faring better than others and riding out the storm. Just 3 in 10 businesses within the automotive sector are concerned about orders, significantly better than the average.
German exports rebounded in March by 0.9 percent after declining by 1.9 percent in February, showing some signs of life, but companies remain fearful over their ability to operate over a lack of business.
Instead of rising by 0.4 percent as forecast, industrial orders fell by 0.4 percent in March, according to the latest published figures by the federal statistics office.
“The order situation is bringing economic optimists back down to earth,” said Alexander Krueger, chief economist at the bank Hauck Aufhaeuser Lampe, as cited by Reuters.
Commerzbank’s chief economist, Dr. Jörg Krämer, warned the downturn in orders would threaten Germany’s economic recovery in the second quarter of 2024 after the country narrowly dodged a recession in the first quarter when it reported growth of just 0.2 percent.
