A noticeable increase in material shortages has been reported by manufacturers of electrical equipment in July, according to a survey released Wednesday by the Ifo Institute. The survey reveals that 12.7 percent of companies in the sector are currently experiencing supply bottlenecks, a significant jump from just 5.7 percent in April.
“This is likely a consequence of Chinese export and trade restrictions on certain rare earth elements” explained Klaus Wohlrabe, head of Ifo Institute surveys. He cautioned that if this trend continues and intensifies, other industries, including machinery and automotive manufacturing, could also be affected.
While the electrical equipment sector faces the most pressing challenges, material shortages are also being felt in the production of wood products (excluding furniture), where 12.0 percent of companies are encountering difficulties. The overall industrial landscape reports a lower incidence of supply problems, with 5.8 percent of firms experiencing issues – an increase from 4.1 percent in April, but still below the long-term average of 15.0 percent.
The automotive industry is demonstrating a potential ripple effect from the electrical equipment shortages, with reported supply difficulties rising from 0.9 percent to 7.1 percent. Conversely, the machinery sector has remained relatively stable, witnessing a slight decrease in reported problems, from 4.9 percent to 4.6 percent.
This current situation, while concerning, pales in comparison to the peak of supply chain disruptions experienced in December 2021, when a substantial 81.9 percent of industrial companies reported material shortages.