Ifo: German industry predicts summer-long production slump
German factories’ coronavirus slump is set to continue throughout summer, though the drop in production will not be as steep, according to a key Ifo survey out today.
The Ifo index of production survey showed Germany’s manufacturers believe their severe coronavirus downturn will continue until at least September. They predict a hit of minus 20.4 points in May, compared to April’s huge decline of minus 51 points.
While that is the German Ifo’s biggest monthly jump on record, economists said it does not represent a big bounceback.
“All it means is that the nosedive is now flattening out,” says Klaus Wohlrabe, head of surveys at Ifo.
However, Germany’s car industry could see production recover quickly, according to the Ifo survey. The indicator for the auto sector leapt from minus 41 points in April to 23 points in May.
“This is no surprise, given how in many cases production had been almost completely halted,” Wohlrabe said.
Pharmaceutical producers expect a slight lull in production from 14 points to minus three May. But clothing manufacturers expect a dire situation to worsen, predicting a plunge from minus 72 points in April to minus 88 points in May.
Producers of metal, electrical equipment, and chemicals all remain stuck in the minus 30s. But the chemical industry and printing sectors put their expectations higher – to minus 20, while food producers predicted output at minus five points on the Ifo index.
The Ifo survey data knocked Germany’s Dax stock market down around one per cent before it trimmed losses to stand 0.6 per cent lower.
It follows official German data published last Friday that showed German factory orders plummeted at a much steeper rate than expected in April.
Factory orders plunged 25.8 per cent in April compared to March’s 15 per cent fall, far below the 19.7 per cent drop expected.
The Federal Statistics Office’s figures showed that domestic orders dropped 22.3 per cent while orders from abroad were down 28.1 per cent.