A significant portion of German businesses continue to grapple with insufficient order books, hindering economic recovery and raising concerns about long-term competitiveness. New data released by the Ifo Institute reveals that approximately one-third (36.9%) of companies are currently experiencing an order deficit, a slight decrease from 37.8% in July but still considerably above the historical average.
The persistent lack of orders, according to Ifo’s head of surveys, Klaus Wohlrabe, isn’t solely attributable to broader economic downturn. “The path out of the order slump remains long” he stated, highlighting the dual pressures of weak demand and escalating costs that compromise price competitiveness for numerous enterprises.
While the industrial sector has shown a marginal improvement – with the percentage of firms lacking orders falling from 38.0% to 35.5% – the relief is unevenly distributed. The automotive sector, previously burdened by significant order shortfalls (38.7% in July), has recorded a notable decrease to 29.5%, suggesting a partial resurgence. However, the metalworking and paper industries remain severely strained, with order deficits hovering around 44% each. Worryingly, the chemical industry witnessed a rise in order deficits, increasing by roughly five percentage points to 39.1%, signaling mounting difficulties within a crucial industrial segment.
The service sector is exhibiting an even more concerning trend. The proportion of companies reporting insufficient orders has increased from 31.4% to 33.6%. Temporary employment agencies are particularly vulnerable, with a staggering 64% facing order shortfalls. The hospitality sector (52.4%) and advertising/market research firms (54.8%) are also experiencing above-average order deficits, indicating systemic challenges impacting a wide range of services.
The wholesale trade sector continues to be heavily affected; nearly two-thirds (61.9%) of wholesale firms report insufficient orders, although slightly lower than the previous quarter. Retail, too, shows limited progress, with approximately half of all businesses (48.4%) still citing inadequate demand.
These ongoing order deficits raise critical questions about the efficacy of government economic policies and their impact on German businesses. The disparate performance across sectors suggests a need for targeted interventions, potentially focusing on measures to alleviate cost pressures and bolster domestic demand. The continued struggles within key industries like chemicals and the ongoing fragility of retail highlight the risk of prolonged economic stagnation if these underlying challenges are not addressed with greater urgency.