bvdm Economic Telegram December 2021: Industry sentiment brightens slightly at year-end despite persistent corona risks and supply bottlenecks

In December the printing and media companies surveyed by the ifo Institute were slightly more positive than in November in their assessment of both their current business situation and their expected business performance over the next six months. The values of the current and expected business situation determine the development of the business climate. 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 had fallen by 2.5 per cent in November, it rose by 2.3 per cent in December compared to the previous month. At 102.1 points, the index is slightly above its pre-crisis level of February 2020. Despite persistently severe supply bottlenecks for intermediate goods and the extremely tense infection situation, the production activity of the print and media companies surveyed recently increased on balance. This increase in production is likely to be primarily attributable to the Christmas business. In December, 48 per cent of companies reported that they are currently working overtime - an increase of 21 percentage points compared to December 2020. At the same time, the proportion of companies that are currently using short-time work fell by 17 percentage points year-on-year to 13 per cent. The share of those who assess their current business situation positively was particularly high among advertising printers and packaging and label printers, at around 59 and 55 percent respectively.

Despite continuing uncertainties regarding the further development of the Despite ongoing uncertainties regarding the further development of the infection situation, print and media companies are now somewhat more confident about their business prospects for the first half of 2022 than they were in November. In December the seasonally adjusted index of business expectations rose by 2.3 per cent. However, at 101.8 points, the index is still below its previous year's and pre-crisis level - the decline amounts to around 2.8 and 1.1 percent, respectively. At the moment, the companies do not expect an end to the supply problems in the near future and most of them are planning to - majority - to react to this with sales price increases. Thus, about 74 percent of the companies state that they intend to increase their sales prices in the next three months - an increase of 68 percent compared to the previous year. Only 1 percent of the respondents, on the other hand, plan to reduce their prices.

This brings the seasonally adjusted balance to around 73 percent - an all-time high. Currently, only about 8 percent of the companies expect a favourable development of their business situation in the next six months. About 23 percent, on the other hand, expect a weaker business development. In addition to delivery problems, these are likely to be primarily concerned with the economic and social risks associated with the spread of the omicron variant.