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Uncertainty hampers the upswing

DIHK Economic Survey February 2022
mechanical manufactor

The mood on the factory floors in Gemany is currently subdued

© industryview / iStock / Getty Images Plus

The German economy assesses its current situation and the outlook for 2022 whole more negatively overall than before the turn of the year. This is the result of the first economic survey 2022 from the 79 German Chambers of Commerce and Industry. The Chambers surveyed almost 28,000 companies from all sectors and regions.

A cautiously optimistic attitude continues to prevail in the companies. Nevertheless, many of them do not know what the future holds due to major uncertainties. So, only just under a quarter of the companies expect better business in the coming twelve months. The still positive balance of companies with higher expectations and those with poorer prospects has thus halved from ten to five compared with the fall of the previous year. Due to the significantly dampened feedback from companies, the DIHK is adjusting its original growth forecast of 3.6 percent for the current year to 3.0 percent.

Energy and raw material prices the biggest business risk for 85 percent of industrial companies – shortage of skilled workers remains very strong

Almost two-thirds of companies currently rate energy and raw material prices as one of their biggest business risks, and in industry the figure is as high as 85 percent. Across all sectors, nine out of ten companies are also reporting higher purchasing prices as a result of supply bottlenecks, and a good half are even talking about price increases "to a considerable extent". Only 10 percent of companies, and thus significantly fewer than in the fall of 2021, expect supply problems to end by the middle of the year. The remaining almost 90 percent are preparing for a longer lean period or do not dare to make a forecast.   

In second place among the business risks is the shortage of skilled workers: 61 percent (compared with 59 percent previously) of companies fear that they will not be able to find enough qualified staff. Concerns about rising labor costs have also increased. 43 percent of companies (up from 40 percent) see this as a risk to their business - more than ever before.  

One third of businesses feel financial problems

More than one in three companies describe their own financial situation as problematic. For example, a quarter of small companies (up to 19 employees) face a decline in equity, and a fifth fear a tight liquidity position(21 percent). The assessment of the financial situation in the hospitality industry and among companies in arts, entertainment and leisure sector is particularly strained. Here the business situation has been greatly exacerbated by the measures taken to stem the fourth Corona wave too, after there had been signs of an upward trend in the fall.

Pharmaceutical companies, textile manufacturers and mechanical engineering firms report better expectations than in fall. In the pharmaceutical and mechanical engineering sectors, more companies also plan to invest in expanding their capacities than in the end of the last year. Overall, companies are holding back even more on investments. 

Despite the difficult environment and the uncertain developments surrounding the pandemic, companies' employment intentions remain in positive territory (balance eight points). More than one in five companies (21 percent) are planning to increase employment, two-thirds are planning to keep staffing levels the same, while 13 percent expect to cut back. Compared with the survey conducted in the fall of 2021, there is a slight downturn (balance of eight points after nine points previously), but the plans are still noticeably above the long-term average (balance of zero points).  

Contact

Porträtfoto Dr. Jupp Zenzen
Jupp Zenzen Director Business Cycle and Growth, Business Surveys

Contact

Picture Julia Fellinger, Press Officer
Julia Fellinger Spokeswoman