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MONEY

German shops hit by supply problems ahead of festive season

Germany's business climate worsened in October for the fourth month in a row as supply chain woes weighed on the country's export-driven economy, according to survey data published Monday.

A man walks through the MediaMarkt carpark
A man walks through the carpark of MediaMarkt in Eschweiler, North Rhine-Westphalia. Photo: picture alliance/dpa | Henning Kaiser

The Ifo institute’s closely watched indicator fell to 97.7 points in October from 98.9 points in September, its lowest standing since April, as businesses in Germany were hit by supply chain fears. 

“Supply problems are giving businesses headaches,” Ifo president Clemens Fuest said in a statement, describing the bottlenecks as “sand in the wheels of the German economy”.

The upheaval caused by the pandemic has given rise to global shortages in everything from timber to semiconductors and plastics.

Germany’s key automotive sector has been hit hard by a lack of computer chips, a key component in both conventional and electric vehicles, forcing several German carmakers to pause production.

The news comes after German shops aired concerns that popular Christmas gifts could be short supply when the festive season rolls around.

A recent survey of retailers conducted by the Ifo Institute revealed that 100 percent of bicycle shops were facing supply issues, while the vast majority of furniture, electronics and DIY stores were also struggling to replenish stocks.

In particular, the shortage of chips is expected to have a knock-on effect on the availability of laptops and smartphones. Economics experts believe the issues with electronics and cars could continue until at least 2023. 

READ ALSO: Why everything is suddenly getting so expensive in Germany

Only in construction did the business climate improve, according to the Ifo survey, while sentiment in manufacturing, services and trade deteriorated.

Growth could be “much weaker” in the coming months, according to Fritzi Koehler-Geib, chief economist at German public lender KfW.

“Material bottlenecks and disruptions in the global transport system have been a burden for longer than originally expected and will probably only ease in the coming year,” Koehler-Geib said.

Earlier this month, German economic institutes, including Ifo, revised down their forecast for growth in 2021 due to global supply chain disruptions to 2.4 percent from their earlier prediction of 3.7 percent made in April.

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MONEY

Where in Germany do people have the highest disposable income?

An economic study has shown huge regional differences in income throughout Germany. So which parts of the country have the most to spend each month, and which are feeling the squeeze?

Where in Germany do people have the highest disposable income?

A study by the Economic and Social Sciences Institute (WSI) of the Hans-Böckler foundation reveals stark regional differences in disposable income in Germany. In some cases, households had as much as double the spending money of those in other parts of the country. 

Here’s where people have the most – and least – disposable income each month.

What is disposable income?

The WSI calculated disposable income as the sum of income from wealth and employment, minus social contributions, income taxes, property taxes and other direct benefits or taxes.

What’s left is the income which private households can either spend on consumer goods or save.

The study, which was based on the most recent available national accounts data for 2019, looked at the disposable income of all of the 401 counties, districts and cities across Germany.

Which regions have the highest and lowest disposable incomes?

The study found that the regions with the highest disposable incomes were in the southern states.

Heilbronn in Baden-Württemberg had the highest disposable income of all 401 German counties and independent cities – with an average per capita disposable income of €42,275. The district of Starnberg in Bayern followed in second place with €38,509.

READ ALSO: REVEALED: How much do employees really earn across Germany’s states?

By comparison, per capita incomes in the cities of Gelsenkirchen and Duisburg in North Rhine-Westphalia were less than half as high, at €17,015 and €17,741 respectively. These regions had the lowest disposable income in the country. 

The study also found that, more than thirty years since German reunification, the eastern regions continue to lag behind those in the west in terms of wages.

According to the WSI, the Potsdam-Mittelmark district is the only district in the former east where the disposable per capita income of €24,127 exceeds the national average of €23,706.

Do regional price differences balance things out?

The study also showed that regionally different price levels contribute to a certain levelling out of disposable incomes, as regions with high incomes also tend to have higher rents and other living costs.

“People then have more money in their wallets, but they cannot afford more to the same extent,” WSI scientist Toralf Pusch explained.

READ ALSO: EXPLAINED: When will Germany raise the minimum wage?

Therefore, incomes in the eastern states, adjusted for purchasing power, are generally somewhat higher than the per capita amounts would suggest.

That could explain why, even after price adjustment, the cities of Gelsenkirchen and Duisburg in western Germany continue to be at the very bottom of the list.

Saxon-Anhalt’s Halle an der Saale, on the other hand, which has an average disposable income of only €18,527, benefits from the lower prices in the east.

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