bvdm economic telegram June 2021: Upward trend in business climate index interrupted
News General news
While the business climate in the German print and media industry has recovered visibly in recent months, it cooled off again slightly in August. The business climate index calculated by the Bundesverband Druck und Medien (German Printing and Media Industries Federation) fell by a seasonally adjusted 0.9 percent compared with the previous month, but at 105.0 points remains above its pre-Corona level of February 2020. Despite ongoing supply bottlenecks for preliminary products, companies assessed their current business situation as slightly better than in the previous month. However, the current resurgence in infection figures is causing their business outlook to cloud over.
In August, the printing and media companies surveyed by the ifo Institute assessed their current situation as slightly better than in July. However, their assessments of their expected business development in the coming months were less confident than in 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.
After the seasonally adjusted business situation index increased significantly in recent months, its growth momentum eased somewhat in the current month. In August, the index rose by 1.3 percent compared to July, thus continuing its upward trend, which has now been ongoing for seven months. Meanwhile, the index is trading at its highest level since mid-2018 and, at 102.8 points, is about 2 points above its pre-Corona level of February 2020 for the first time since the outbreak of the Corona crisis. Year-on-year, the increase is about 24 percent. Despite the prevailing shortage situation on the procurement markets, around 23 percent of companies said in August that they were satisfied with their current business situation. By contrast, around 14 percent rated their situation as weak. Compared with the previous year, the balance thus improved by 41 percentage points.
The fact that the business climate clouded over slightly despite an improved assessment of the situation is attributable to the less confident expectations of print and media companies with regard to their future business prospects. In August, the seasonally adjusted business expectations index fell by 3.0 percent compared with July, thus giving back some of the increase seen in the previous month. At 107.3 points, however, the index is about 4 points above its pre-crisis level. Concerns about a worsening of the infection situation in the coming months apparently prompted companies to revise their expectations downward. As a result, the seasonally adjusted balance of business expectations fell by 6 percentage points in August compared with the previous month, but nevertheless remained in positive territory at 7 percentage points.
