bvdm economic telegram June 2021: Business climate calms down
News General news
Following the turbulent development of the business climate in the German print and media industry in recent months, the climate calmed down somewhat in June. The business climate index calculated by the Bundesverband Druck und Medien (German Printing and Media Industries Federation) increased by a seasonally adjusted 0.9 percent compared with the previous month and, at 100.0 points, was around 2.3 percent below its pre-crisis value of February 2020. While the business situation of companies continued to improve due to the current slowdown in infection dynamics, expectations were weaker than in the previous month. This is likely to be mainly related to the currently increasing spread of the delta variant and the associated concerns about renewed restrictive measures in the coming months. Expectations of sharply rising supplier prices - in the further course of the year - also play an important role here.
In June, the print and media companies surveyed by the ifo Institute assessed their current situation as better than in the previous month. However, their expectations regarding development were, however, weaker than in May. 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 had already increased in May, the rise was even stronger in June. The index rose by 5.2 percent to 95.2 points, 26.3 percent above its Corona low of June 2020. The main reasons for this exceptionally strong increase were a clear year-on-year improvement in demand, orders and production. exceptionally strong increase. Nevertheless, it must be taken into account that the business situation index was at an eleven-year low in June last year. an eleven-year low, so that the year-on-year comparison is consequently very high. Most companies are still dissatisfied with their order backlog. Although the balance improved by more than 30 percentage points compared with the previous year, it remained clearly negative at around -33 percentage points. Consequently, more than half of all participants continue to use short-time work - a year ago, however, this figure was still more than two thirds of all companies. Nevertheless, a gradual recovery in the current business situation can be observed, as this has now been improving for five months in a row in the previous month's comparison.
The fact that the business climate hardly changed despite the positive development of the business situation is due to the more pessimistic expectations of print and media companies with regard to their future business situation. In June, the seasonally adjusted business expectations index fell by 3.2 percent to 105.0 points. The index is thus 8.1 percent above its previous year's level - in May, the figure was 15.1 percent. A major reason for this previous month's decline - related to the current strong spread of the delta variant of the coronavirus - is likely to be concerns about renewed restriction measures starting in the fall. In addition, the decline in the index is also likely to be due to fears of a continuation of the current sharp rise in supplier prices. Companies are planning to respond to this. For example, around 20 percent of companies plan to increase their selling prices in the next three months. Only around 4 percent intend to reduce prices. Compared with the previous year, the balance has thus risen by around 28 percentage points.
