German Manufacturers Want to Increase Production
German manufacturers’ production expectations have brightened somewhat; the corresponding ifo indicator rose to 8.4 points in January, up from 5.1 points in December. This is a finding from the most recent ifo Business Survey. “Expectations in the automotive and pharmaceutical industries improved dramatically,” says ifo expert Klaus Wohlrabe. “In contrast, the indicator dropped significantly for furniture and clothing manufacturers.”
While expectations among automotive manufacturers and their suppliers improved markedly, their indicator remained in negative territory at minus 4 points, up from minus 18 points in December. The indicator for pharmaceuticals jumped, too, from 6 points in December to 16 points in January. Beverage manufacturers are looking to expand production; their indicator rose to 9 points from 0 points in December. The chemical industry is still optimistic, with its indicator rising to a good 15 points.
By contrast, dark clouds are gathering in the clothing and furniture industries: the clothing indicator nosedived to minus 81 points from minus 42 points in December, while the furniture indicator tumbled to minus 16, down from plus 24 points in December. The prospects for manufacturers of textiles and of leather, leather products, and footwear have also dimmed. In textiles, the indicator fell to 0 points from plus 11 points in December; the indicator for leather manufacturers dropped to minus 48 points from minus 33 points in December.
The German Federal Statistical Office will announce its December figures for industrial production today, Monday.
As part of its monthly Business Survey, the ifo Institute asks some 2,000 companies in the manufacturing sector about their production plans and expectations for the next three months. Companies are asked to report their expected domestic production activity. They can describe their planned activity as “increasing,” “remaining roughly the same,” or “decreasing.” The balance value of their expectations, given here in points, is the difference in the percentage shares of the responses “increasing” and “decreasing.”
