A tight global supply threatens to derail Germany’s economic recovery, with the country’s auto industry suffering the biggest fall. The companies of BMW, Siemens AG and Volkswagen are all reporting a lack of material supplies, from the most basic wooden pallets to memory chips.
Thomas Nuernberger, Managing Director of Sales at Germany-based EBM Papst in Mulfingen, a manufacturer of industrial fans, told Bloomberg: âIn my career, we haven’t had a situation with so many rare products at the same time, and I have been dealing with the same materials since 1996.
âThis is the most difficult situation in the global supply chain that I have witnessed. “
He added: “I expect growth to be stunted until 2023, because even in 2022 we will still have problems with semiconductors and the container shipping crisis will also last until 2022.”
German factories were still operating at around 7% below their pre-pandemic level in June, according to Bloomberg Economics, with automakers and machine makers particularly lagging behind.
Clemens Fuest, president of the Munich-based Ifo Institute, said: “Things are getting worse rather than better.”
Siemens CEO Roland Busch also warned last month that the global semiconductor shortage and rising material costs could delay a recovery “until 2022”.
Volkswagen CEO Herbert Diess told Bloomberg TV that his company, Europe’s largest automaker, “will be successful in the third quarter as production is now very limited.”
The company’s global vehicle deliveries plunged 19% in July.
Maeva Cousin, senior eurozone economist at Bloomberg Economics, said: âDespite an increase in orders, Germany’s industrial recovery has been hampered by severe supply disruptions.
READ MORE: Eurozone on alert as inflation hits highest level in nearly a decade
âWe expect the industrial sector to start contributing positively to growth from Q3.
âIt is true that progress is likely to be gradual and bumpy, but as services continue to respond quickly to the reopening, the impact on growth is expected to be small. “
German benchmark bond yields hit their highest level in more than five weeks on Tuesday after a higher than expected inflation reading and an ECB policymaker called on the bank to cut its emergency bond purchases as soon as possible. the next quarter.
Robert Holzmann, governor of Austria’s central bank, said the bank was in a situation where it could consider cutting back on purchases and added that he expected the issue to be discussed at the policy meeting. general bank next week.
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Banque de France Governor FranÃ§ois Villeroy de Galhau also adopted a more hawkish tone on Monday when he said the ECB should take into account the recent improvement in financing conditions when discussing the future of purchases linked to the pandemic.
Holzmann’s call to start cutting back on bond purchases follows data showing eurozone inflation rose to 3% year-on-year in August, the highest in a decade, well beyond. above the European Central Bank’s 2% target and a Reuters poll’s forecast of 2.7%.
Core inflation, a narrower reading that excludes volatile food and energy costs, also rose to 1.6%, compared to expectations of a 1.4% increase.
The German 10-year yield, the benchmark for the eurozone, rose 5 basis points to a high of -0.383%, the highest since July 22.
Italian 10-year rates peaked 0.7050%, up 8 basis points, pushing the closely watched spread with German 10-year rates to 109 basis points.
âHolzmann certainly accelerated the rise in yields, but it started earlier today and continued thereafter.
Inflation has been a factor, although I would say the immediate policy implications are limited, âsaid Antoine Bouvet, senior rate strategist at ING.