Manufacturing: Staff Shortage Curbs Production

The business climate in manufacturing cooled down further this month. Assessments of the current business situation continued to deteriorate, following the downward trend that began in June. This was partly due to the fact that half of the manufacturers surveyed reported production constraints this month. Around a quarter of survey participants reported a labour shortage, in line with the survey results for the previous quarter. The second most serious constraint cited by 16% of manufacturers was material shortages, although this figure was slightly lower than in the previous quarter. The flow of incoming orders continued to dry up in October and was cited as a constraining factor by 14% of manufacturers. The outlook for the months ahead was clearly less optimistic, partly due to the poorer growth outlook in foreign markets. According to the survey results, demand fell in September, which was also reflected in higher inventory overhangs. More manufacturers ramped up production last month, but capacity utilisation fell to 87.1%, which was lower than for the same period last year. Less favourable assessments of incoming orders prompted manufacturers to scale back their production plans.