Suppliers feed off order substance
4/27/2023 Markets & Industries News

Suppliers feed off order substance

The business climate of German suppliers faces an ambivalent development at the start of the second quarter of 2023. This is according to the Business Climate Index for the Supplier Industry in April 2023, which is calculated by the Supplier Industry Working Group in cooperation with the Ifo Institute.

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German suppliers are not starting the second quarter of 2023 without worries, as can be seen from the Business Climate Index for the Supplier Industry of the Arbeitsgemeinschaft Zuliefererindustrie (ArGeZ) and the Ifo Institute. A weakening from 5.2 to 4.0 points is measurable. The reason is the assessment of the current situation.

The Supplier Industry Business Climate Index is calculated by the ArGeZ in cooperation with the Ifo Institute. It is based on a survey of about 600 companies and covers the sectors of the foundry industry, aluminium industry, plastics processing, steel and metal processing, non-ferrous metal industry, rubber industry and technical textiles, all of which are members of the ArGeZ.
Business Climate Supplier Industry April 2023 The graph describes the business climate in the supplier industry in Germany. The red line represents the current situation. The blue line describes the expectations for the next six months. The data are seasonally adjusted, balance of positive and negative assessments.

Lowest value in two years

At 13.5 points in April 2023, the index is at its lowest level in two years. Whether the positive trend of the previous months has been broken will only become clear in May, traditionally a strong month for orders. At present, suppliers are clearly drawing on their order reserves. 

Positive impulses from the main customer sectors are rather hesitant. The order backlog in vehicle construction is slowly melting away. New, stable demand reactions from the market have failed to materialise. This is accompanied by a sideways movement in supplier expectations. On a six-month horizon, the balance of optimists and sceptics is still negative by five percentage points.

Electricity prices cause uncertainty

The stable signals from German suppliers and the manufacturing sector as a whole were particularly important in March against the background of the turbulence on the financial markets. Uncertainty continues to be caused by the deadlock over decisions on a competitive industrial electricity price.

In the meantime, individual parliamentary groups, even from the traffic light coalition, are exerting pressure, the ArGez press release continues. This makes the lack of signals from the Federal Ministry of Economics all the more incomprehensible. "From talking to doing", the election slogan at the opening of the Hanover Fair, must become the guiding principle.
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