bvdm business telegram September 2021: Business climate index stabilizes

In September, the print and media companies surveyed by the ifo Institute assessed their current business situation as weaker than in August. Their expectations regarding their future business development, on the other hand, brightened somewhat compared with the previous month. The values of the current and expected business situation determine the development of the business climate, which is a good leading indicator for the production development of the print and media industry.

While the seasonally adjusted business situation index has shown uninterrupted growth since February 2021, it lost 2.0 percent in September compared with August. This marked the end of the index's seven-month recovery trend. At 100.3 points, the index is down around 1.0 percent from its pre-crisis level in February 2020, although it remains well above its year-earlier level - currently up around 20 percent. Despite the recent net increase in orders on hand and the significant year-on-year improvement in demand and production, the current shortage of raw materials and supplies is visibly slowing the economic recovery in the sector. In addition, steadily rising prices for intermediate goods are preventing companies from improving their earnings situation. In September, 13 percent of respondents rated their earnings situation as good, while 34 percent rated it as poor. Compared to the previous year, the balance thus increased only marginally - despite recent increases in sales prices - but remained clearly in negative territory at -22 percentage points.

Nevertheless, print and media companies are currently somewhat more confident about the future than in the previous month. In September, the seasonally adjusted business expectations index rose by 1.3 percent compared to August. At 108.7 points, the index is around 8 percent above its year-earlier level. Although the current bottleneck situation is hitting companies hard, around 30 percent expect their production activities to increase in the coming three months. Only around 5 percent expect production to decline. For this reason, on balance, companies are also planning to increase their workforce again. Nonetheless, companies expect the major problems in procuring input products to persist in the coming months. Thus, 34 percent of companies state that they intend to make use of short-time working in the course of the next three months. Compared with the previous year, however, this represents a decline of around 20 percentage points.