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Bottlenecks squeeze German output in December

FRANKFURT (AFP) – German production fell in December, pulled down by a suffering construction sector, official figures published yesterday showed, as Europe’s largest economy struggled to shake off the drag caused by widespread supply bottlenecks.

Output was down 0.3 per cent in the last month of the year, cancelling out a revised 0.3 per cent rise in November, according to figures from the federal statistics agency Destatis.

Over the whole of 2021, industrial production was three per cent higher than in 2020, but still 5.5 per cent lower than 2019, before the onset of the coronavirus crisis.

Production of capital goods was up 2.5 per cent in December, while intermediate goods were up 0.6 per cent. The production of consumer goods fell by 0.5 per cent, and construction fell by 7.3 per cent.

The poor figures in construction masked a result that was “not as bad as it looks at first glance”, as industrial output excluding energy and construction actually grew for the second month in a row, ING Bank Head of Macro Carsten Brzeski said.

“Despite these first positive signs, German industry remains in the stranglehold of global supply chain frictions,” said Brzeski.

Shortages of raw materials and components, which steadily increased over the course of 2021, meant that while order books for industry are full, production struggled to keep pace.

Supply bottlenecks had cost industry “about EUR70 billion (USD80 billion) in lost added value” last year, according to the economic think tank IfW Kiel.

The disruption caused by missing inputs was a “major reason why economic output in Germany was still behind its pre-crisis level” at the end of 2021, the think tank said.

Germany’s economy grew by 2.8 per cent in 2021, according to figures published by Destatis in January.


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