Manufacturing (Germany):
Slump in demand

In manufacturing the business climate indicator fell considerably. The surveyed participants reported a primarily unfavourable business situation in November, after having given it satisfactory marks in the previous month. The demand situation and order stocks have developed clearly more weakly; inventories are increasingly regarded as too large. Stocks of unsold finished goods, measured in terms of the time needed for their production, rose perceptibly. These assessments indicate that because of the surprisingly weaker demand an involuntary increase in inventories has occurred. For this reason, manufacturers plan further cuts in production. On the whole, they are more sceptical regarding future developments; their business expectations are clearly negative. The international economic situation is also responsible: the exporters reckon with a perceptible weakening of export business. Up to now the firms have maintained personnel levels, but now they are looking at reducing the number of their employees. The worsened demand situation and the relief on the cost side from lowered prices for energy and raw materials, has led to weaker price hikes on the producer level: firms now plan hardly any increases in prices. The above-described pattern is apparent in various industries and is thus apparent for manufacturers of intermediate products, capital goods producers and, albeit not as strongly, for consumer goods producers.