Manufacturing: Current Business Situation Deteriorates

The business climate in manufacturing cooled down due to more cautious assessments of the current business situation. One of the reasons for these poorer assessments was production constraints that affected nearly half of the companies surveyed in July. The manufacturers surveyed not only reported staff shortages, but also complained of material shortages in particular. This quarterly variable has risen steadily since January 2016 with the exception of just one month and most recently affected one in five companies. This was also reflected in progressively slower growth in production in both of the last two months, despite plans to ramp up production levels. Despite production constraints, more manufacturers expect their business to grow over the next six months. The manufacturers surveyed once again saw greater growth potential in foreign markets. Their satisfaction with order backlogs remained high.