Manufacturing (Germany):
Inventory pressure increases

The survey participants in manufacturing gave considerably more unfavourable assessments of their present business situation than in November. The demand situation deteriorated considerably and order reserves shrank visibly. The stocks of finished goods were judged more frequently as too large. The employment outlook has worsened again. The share of firms that emply overtime has clearly declined. Although reduced working hours are not common, 30 percent of the surveyed firms plan to use this option in the coming months. Hardly any industry sector can escape the tendency towards shorter working hours and personnel reduction. Particularly the capital goods industry is suffering from the global economic downturn, and firms are increasingly reckoning with a weakening of export business. In motor vehicle construction, the manufacturers fear a dramatic decline in exports, and the share of firms considering reducing working hours is correspondingly high. And they are not alone; in metal production and processing more and more firms are planning to use this instrument. The worsening of the business climate is less pronounced among consumer goods manufacturers. Nevertheless, here too the survey participants also plan to reduce personnel somewhat. All in all, firms in all sectors of manufacturing anticipate a worsening of the business situation in the coming six months.