Shortage of Materials Worsens in German Manufacturing

The shortage of materials in German manufacturing has become more severe. In August, 69.2 percent of industrial companies in Germany complained of bottlenecks and problems with intermediate products and raw materials according to an ifo Institute survey. This new record follows on the heels of last month’s 63.8 percent. “This is not without consequences for manufacturing output. The procurement crisis poses a genuine threat to the economy’s recovery,” says Klaus Wohlrabe, Head of Surveys at ifo. As a consequence, more and more companies want to raise prices.

“Sharply higher purchase prices for intermediate products continue to cause companies problems,” Wohlrabe adds. The shortage of semiconductors and chips is having a particularly strong impact on car manufacturers and their suppliers (91.5 percent, up from 83.4 percent) as well as electrical equipment manufacturers (steady at 84.4 percent). Despite an easing in the price of wood, a very large number of furniture manufacturers continue to be affected (86.2 percent, up from 73.2 percent).

As a result of this procurement crisis, more and more companies are looking to raise prices. The ifo price expectations have risen to a new record level. “Companies are passing higher purchase prices on to their customers,” Wohlrabe says. Price increases are planned in the electrical and electronics industry and in the metal industry in particular. However, the chemical industry and manufacturers of machinery and equipment also want to raise their prices. The automotive industry, meanwhile, sees comparatively little room for maneuver.