Supply Bottlenecks Throttle German Industrial Output in April

A lack of semiconductors, timber and other intermediate goods drove an unexpected fall in German industrial output in April, a further sign that massive supply bottlenecks are hampering the recovery in Europe's largest economy, Reuters reported. The Federal Statistics Office said industrial output dropped 1.0% on the month after a downwardly revised increase of 2.2% in March. A Reuters poll had pointed to a 0.5% rise in April. The drop in the headline figure was driven by a decrease in consumer goods production of more than 3% and a plunge in construction activity of more than 4%. The weaker than expected industrial figures suggest that the German economy will have to rely on household spending to support a still-fragile recovery from the coronavirus crisis. "Such a combination is unparalleled: Order books in industry are well filled and production is falling," VP Bank economist Thomas Gitzel said, adding that the supply problems with semiconductors were pushing down output in the car industry. So despite well-filled order books, manufacturing will only make a limited contribution to overall economic growth in the second quarter, Gitzel said. The economy ministry said industrial output was being hampered by supply bottlenecks for intermediate products such as semiconductors and timber. But it added that business sentiment surveys were suggesting an improvement in coming months. Read more.