bvdm economic telegram July 2021: Business climate index on the up, despite increasing supply bottlenecks

In July, the print and media companies surveyed by the ifo Institute assessed both their current situation and their situation expected for the next six months much more positively than in the previous month. The values for 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.

In July, the seasonally adjusted business situation index continued its upward trend that has been observed for months. As in June, the index rose by 5.5 percent compared with the previous month and, following this renewed increase, was back at the pre-crisis level of February 2020 for the first time since the outbreak of the Corona crisis at 101.3 points. Compared with the previous year, the increase was even considerably higher at around 24 percent. It is true that the improvement in order trends that accompanied the easing of the Corona restriction measures led to a year-on-year increase in capacity utilization of around 9 percentage points to 81.2 percent. Nevertheless, more than 80 percent of all companies currently report being affected by production constraints. One of the most frequently cited reasons in this context is the increasing shortage of raw materials and intermediate goods. One in two companies whose production activities are currently being impacted is affected by supply shortages of key production materials. Compared with July last year, this figure has risen by 46 percentage points and is thus at an all-time high.

Nevertheless, print and media companies were also visibly more confident about their future business development than in June. In July, the seasonally adjusted business expectations index rose by 5.0 percent compared to the previous month. At 110.7 points, the index is 0.8 percent above its year-ago level - the second-highest index reading since February 2004. While around 38 percent of respondents currently expect their business situation to improve in the next six months, around 15 percent expect it to be weaker than recently. In addition, around 34 percent of the companies surveyed currently expect their production activity to increase in the next three months. Only around 5 percent expect their production to decline. Compared with the previous year by around 18 percentage points compared with the previous year. In view of the increasingly However, in view of the worsening problem of material shortages and rising supplier prices, around 31 percent of companies are planning to increase their selling prices. Only 11 percent intend to reduce their prices. The seasonally adjusted balance of responses is thus around 18 percentage points - the highest figure since June 2000.