Wachstumskurve mit Kugelschreiber symbolisiert die wirtschaftliche Lage.

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  • The bottlenecks that are persisting on the markets for intermediate goods and commodities are limiting the production capacity of the German industrial sector. Industrial output fell by a large margin in August and it is likely that it will continue to be develop slowly in the coming months. At the same time, the services industries are continuing to recover, supported by an improving business climate in these industries. Looking ahead, it is likely that economic development will be flat in Q4.
  • Industrial output shrunk by 4.7% between July and August. The important automotive and mechanical engineering sectors saw their output decrease considerably. New orders in the manufacturing sector also fell quite considerably, but still remain well above the pre-crisis level and the figures from the beginning of this year. The outlook for industrial activity therefore remains cautiously optimistic, if a little less so than before.
  • Retail turnover improved slightly in August, reaching levels well above those from February 2020, i.e. before the crisis.
  • The inflation rate is at a high level of 4.1%, but did not rise further between August and September in seasonally-adjusted terms. It has been considerably elevated since the beginning of the year, due to special factors. Once these special factors cease to exert their influence as of 2022, however, the inflation rate is expected to fall markedly again.
  • The impressive recovery seen on the labour market in recent months is continuing, with strong demand for labour in the autumn. In September, unemployment fell markedly once again, with levels of gainful activity also seeing a positive development in August (all in seasonally-adjusted terms). The number of people in short-time work fell below 1 million in July and is likely to have fallen further in August.
  • In fact, Germany’s local courts registered 17.7% fewer filings for insolvency in the first semester of 2021 than in the first semester of 2020. In July 2021, the number of filings for insolvency remained roughly at the same level as that of the preceding month (1200, +0.3%). The Federal Statistical Office reported an 8% month-on-month rise in the number of filings for regular insolvencies registered in September. This compares to a 25% increase over the figures for September 2020, when the obligation to file for regular insolvency was suspended. There is a consensus that there is currently no reason to suspect the figure to rise considerably in the coming months.

[1] This report is based on data that were available as of 13 October 2021. Unless stated otherwise, these are rates of change against the respective preceding period on the basis of price-adjusted figures which have also been adjusted for calendar-day and seasonal variations.


Germany’s industrial output fell markedly in August. There are persisting bottlenecks in the supply of intermediate goods, which are likely to continue to have a negative effect on some parts of the industrial sector in the coming months. By contrast, the services industries are continuing to grow. The manufacturing sector experienced a broad-based and marked fall in output in August. The automotive and mechanical engineering sectors saw their output fall by a particularly large margin. New orders in the manufacturing sector also fell quite considerably, but remain at a very high level. They point to a largely positive situation on the demand side. For the first time in 15 months, Germany saw its exports shrink. The sentiment indicators show that expectations among German exporters improved again in September, remaining more optimistic than average. At the same time, however, global industrial output and global trade had a slow start in Q3, stagnating or even falling slightly. By contrast, the business climate in the services sector improved, with expectations brightening in view of the stable curve of infections. Retail turnover also saw a small rise in August, signalling a robust economic situation to the services sector. The recovery on the labour market is continuing, with another marked fall in unemployment and also in the number of people in short-time work, The extrapolations show that this number has now fallen to under 1 million. Overall, economic output is likely to still have risen in Q3. Going forward to Q4, it is likely that growth rates will normalise. The most important risk to economic development, the pandemic aside, comes from the current supply shortages.


Following the slow development of global industrial output and the goods trade seen in Q2, the start to Q3 was lacking in vigour: global output in July stagnated at the level of June, whereas trade fell slightly month on month (-0.9%). This cannot be fully explained by the current shortage of important intermediate goods, especially semiconductors. Much of the economic slowdown emanated from the developing world and from emerging economies, where the recovery is hampered by slow progress on vaccinations and by containment measures to prevent the spread of the delta variant. As restrictions are eased, however, the sentiment indicators are brightening for the global services sector. In September, the J.P. Morgan/IHS Markit composite purchasing managers’ index rose by 0.6 points, reaching 53.4 points. This improvement, combined with the unchanged sentiment in the industrial sector (54.1 points) helped this composite index recover for the first time in three months (+0.5 points to 53.0 points) This is above the growth threshold of 50 points.


In August, the value of goods and services exports fell by 2.5% month on month, adjusted for seasonal variations and on a nominal basis (July: +2.1%). The two-month comparison shows growth of 0.9%. Given the stronger rise in export prices, however, it is likely that the export volume has shrunk in real terms. Imports of goods and services rose by 2.5% between July and August (seasonally adjusted and on a nominal basis). This comes after a slight decline in July (-0.1%). Imports were up 1.9% in the two-month comparison. However, as import prices are also rising, it is likely that imports have fallen in real terms.

The leading indicators for foreign trade and investment point to a mixed picture at national level: new foreign orders slumped by 9.5% between July and August. This, however, comes after strong growth (+10.4%) driven by large orders. The less volatile two-month comparison shows a rise in foreign orders of 5.7%. In September, the ifo export expectations partly recovered from the heavy blow received in August, therefore continuing to be more optimistic than average. Around one in four companies expect the situation to improve within three months (up from approx. one in five).


Manufacturing output in August saw a drop compared with the preceding month, falling by 4.0%. Industrial output fell by 4.7%; the construction sector saw its output fall by 3.1%. The two-month comparison for July/August compared with May/June showed a decline in output of the goods-producing sector of 1.1%. Industrial output decreased by 1.3%, output from the construction sector stagnated.

New manufacturing orders fell by 7.7% between July and August. By contrast, the two-month comparison of July/August versus May/June shows a plus of 3.1%. Excluding large orders, however, order activity dropped by 1.3%. Following a strong rise in new orders at the beginning of the year, order levels declined considerably in more recent times. This was largely due to weak foreign demand (-9.5%), particularly from outside the eurozone (-15.2%). But domestic demand also played a part in it (-5.2%). The large sector of vehicles and vehicle parts registered a fall in new orders of 12.0%, whereas new orders in mechanical engineering, also a large sector, declined by only 1.0%. This latest fall in demand will be partly due to large orders placed in the preceding months and also to the fact that several automotive companies had their annual holiday shutdowns in August. Despite the weak performance in August, orders in the manufacturing level remain at a high level overall, having grown approx. 8 1/2% compared to February 2020, just before the onset of the crisis, and approx. 4% compared to January 2021.

Industrial output fell considerably in August, after a positive start to Q3. The supply bottlenecks affecting semiconductors, intermediate products and commodities are proving more serious than expected. The slump in automotive output (-17.5%) is partly owing to the fact that some manufacturers had their annual holiday shutdowns in August. While the sentiment indicators recently fell in three consecutive months, they had been improving almost throughout the whole first semester. Export expectations in the industrial sector are improving again. On the whole, the outlook for the industrial sector has become somewhat less favourable recently, but remains cautiously optimistic given the continuous high level of demand.


Retail sales (excluding vehicles) rose by a slight 1.1% in August, following a fall of 4.5% in July. The pandemic situation had calmed down again, leading consumers and retailers to regain some confidence. Sales of textiles, clothing and footwear rose 3.9%, returning to just above the levels of February 2020, prior to the crisis (+0.6%). Online and mail-order sales grew by 9.0%, which is well above the pre-crisis level (+29.8%). New car registrations by private owners rose for the fifth consecutive month in September (+1.3%).

By contrast, the ifo figures for business expectations in the retail sector dipped again in September, having decreased considerably in August. The GfK consumer climate also registered a marked fall in September, but is expected to rise palpably in October. Consumers seem to expect the fourth wave of infections to become less intense than had been feared.

The consumer price level once again remained stable between August and September (±0.0%). The inflation rate, the year-on-year development of prices, rose by 0.2 percentage points to 4.1% in September. This is the highest rate registered since December 1993. Much of the slight increase year on year is owed to a base effect: the consumer price index had fallen by 0.2 percentage points in September 2020 due to low fuel prices. The inflation rate climbed up 1.5 percentage points in July 2021, as had been expected. This sudden surge towards the middle of the year was the result of a base effect cased by the temporary reduction in VAT rates in the preceding year. In other words, the current consumer prices – which include the regular VAT rates – are being compared with prices that were subject to reduced VAT rates. Other special effects that have also resulted in a considerable increase in the inflation rate since the beginning of the year include the recovery of import and commodity prices and the introduction of carbon pricing. Once these special effects cease to exert their influence at the end of the year, the upward trend in consumer prices is likely to weaken considerably. The core inflation rate (excluding energy and food) rose slightly to +2.9% in September (compared to +2.8% in August). Energy and food prices soared 14.3% and 4.9% respectively in year-on-year terms (August: +14.9% and 4.6% respectively). Current developments on the commodity markets, however, suggest that the oil price will ease in the medium term.


The impressive recovery seen on the labour market in September is continuing, with positive prospects for the coming months. The ease of restrictions that had affected many services led to a reduction in unemployment and underemployment in September (-30,000 persons and -54,000 persons respectively, in seasonally-adjusted terms). According to the unadjusted figures, unemployment fell by 114,000 to now stand at 2.47 million people. Compared with the previous month, the number of unemployed persons was down by 393,000. Gainful employment also continued to develop well, with another plus of 66,000 persons in August (figure adjusted for season). According to the unadjusted figures, there were 45.1 million people who were gainfully active, which is an increase of 328,000 year-on-year. Employment subject to social security contributions rose by 32,000 persons in July, compared to the preceding month. According to the Federal Employment Agency, the number of people in short-time work fell to 0.9 million in June. The number of people in short-time work is expected to fall again in August. Demand for labour is continuing to rise. The leading indicators published by ifo and the Institute for Employment Research (IAB) differ for September, with the ifo employment barometer registering its highest score since October 2018, whereas the IAB barometer fell from its own record score. Overall, however, both leading indicators point to a continued recovery on the labour market over the coming months, as is also suggested by the number of job openings available.


Germany’s local courts registered 17.7% fewer filings for insolvency in the first semester of 2021 than in the first semester of 2020. The level of insolvency filings also remained stable in July 2021 (+0.3). On the basis of insolvency notifications, the Federal Statistical Office reported an 6% month-on-month rise in the number of filings for regular insolvencies registered in September. This compares to a 25% increase over the figures for September 2020, when the obligation to file for regular insolvency was suspended. While it is still not possible to rule out a slight rise in company insolvencies for the rest of the year, any such rise would probably be fairly moderate – if at all noticeable. Forecasts published recently by several experts suggest that the number of company insolvencies will stagnate in 2021 as a whole (Federal Association of German Cooperative Banks (BVR): -1%; Euler Hermes: -5%; both compared to 2020).