Expanded agreements in the manufacturing sector
The manufacturing sector in Germany experienced a notable rise in order backlogs during the early months of 2021, according to data recently released by the Federal Statistical Office (Destatis).
In January 2021, the order backlog in the manufacturing sector increased by 0.8 percent compared to the previous month, and by 5.0 percent compared to February 2020, which was the month before the start of restrictions due to the Corona pandemic in Germany. This surge in order backlogs suggests that manufacturers have been struggling to keep up with the demand for their products.
The sector of intermediate goods producers saw a particularly significant increase, with a 2.7 percent rise in order backlogs compared to January 2020. The coverage of the order backlog in this sector was 3.5 months in January 2021, higher than the 3.4 months in December 2020. This indicates that it would take approximately 3.5 months for manufacturers in this sector to clear their existing order backlogs at the current production rate.
The order backlog in the sector of investment goods producers also rose, with a 0.3 percent increase compared to January 2020. The coverage of the order backlog in this sector was 9.7 months in January 2021, higher than the 9.3 months in December 2020. This suggests that the clearance of order backlogs in the investment goods sector would take significantly longer than in the intermediate goods sector.
In the consumer goods sector, the order backlog was 3.3 percent higher than in the previous month, and the coverage of the order backlog was 2.8 months in January 2021, lower than the 2.7 months in December 2020.
The data also revealed that both domestic and foreign orders rose almost equally, with a 0.9 percent increase in domestic orders and a 0.8 percent increase in foreign orders.
The coverage of the order backlog in the manufacturing sector as a whole increased to 6.9 months in January 2021, a new record since the beginning of the time series in 2015. This indicates that the manufacturing sector as a whole is experiencing longer lead times for fulfilling orders, which may have implications for supply chains and overall economic growth.
The substantial increase in manufacturing order backlogs in early 2021 can be attributed to a combination of supply chain disruptions, increased demand for certain goods (e.g., medical supplies, electronics), and capacity constraints. Many manufacturers experienced a backlog growth as orders outpaced the ability to fulfill them promptly.
The order backlog coverage varied by sector, with the automotive and electronics sectors having significant backlogs extending several months due to semiconductor shortages. Pharmaceuticals and medical equipment sometimes had fluctuating backlogs depending on pandemic-related demand changes. Other sectors faced moderate backlogs influenced by raw material availability and shipping delays.
However, exact numerical values or sector-by-sector coverage durations from January 2021 or current levels were not available in the search results. For precise figures and more detailed insights, industry groups, government manufacturing reports, and sector-specific economic research organizations are typically the best sources of information. The data presented here provides a broad overview of the current state of order backlogs in the German manufacturing sector.
In light of the surge in order backlogs within the manufacturing sector, financial institutions may consider allocating more funds to support manufacturing companies struggling to meet increased demand. The prolonged order backlog coverage, particularly in sectors like automotive and electronics, also underscores the need for collaboration between the manufacturing industry and other sectors, such as raw material producers and shipping companies, to alleviate supply chain bottlenecks.
