Record Order Backlog in German Manufacturing
Order backlog among Germany’s manufacturers is currently at a record high. An ifo survey in April found that even without a single new order, production could continue for 4.5 months. In the previous survey in January, that figure was 4.4 (seasonally adjusted) months. The long-term average for an order backlog is 2.9 months. “This recent increase in backlog is only slight, which indicates that the intake of new orders is gradually decreasing,” says Timo Wollmershäuser, Head of Forecasts at ifo.
“The order backlog reflects both the high demand for German industrial goods over the past few months, and the difficulties companies are having processing existing orders promptly due to the shortage of key intermediate products and raw materials,” Wollmershäuser continues.
“If supply bottlenecks were to ease in the coming months, German manufacturing output could really take off,” he adds. “This would give economic output a big boost. However, there are currently many reasons why we can expect supply bottlenecks to tighten – one in particular is the consequences of the strict lockdowns in China, which until recently supplied 15 percent of Germany’s imported intermediate products. The order backlog is particularly large in the automotive industry (manufacturers and suppliers) at 7.4 months; for manufacturers of machinery and equipment (6.5 months); and for manufacturers of data processing equipment (6.3 months). Orders are slimmest for textile manufacturers at 1.7 months.
