This means that the situation has deteriorated further since the last survey in April. At that time, over 40% of participants in the ifo Business Survey from the mechanical and plant engineering sector were already reporting shortages in the supply of materials. According to a VDMA survey, also conducted in April, around one in four companies expected supply chains to become increasingly tight within the next three months. "This tightening was - unfortunately! - was to be expected," explains Wiechers.

Business climate falters

The poor supply situation is probably also a reason for the less euphoric mood among entrepreneurs. For the first time in nine consecutive increases, the ifo Business Climate in the mechanical engineering sector was unable to rise further in July. The reason for this is a decline in optimism with regard to developments in the coming months (plus 29.6 percent after plus 33.3 percent in June). "The shortage of primary products is dampening companies' production plans. In addition, rising infection figures in many markets that are important for the mechanical engineering sector are putting further pressure on supply chains," says Dr. Ralph Wiechers.

Production forecast remains at plus 10 percent

Nevertheless, the VDMA is sticking to its annual forecast of plus 10% production growth. This is because companies not only assessed their current business situation as slightly better than in the previous month (plus 48.9% on balance after plus 45.6%). Capacity utilization also rose again in July compared to April and, at 88.3%, is now well above the long-term average of 85.9%. In addition, an increase in short-time work, for example as a result of deliveries being canceled, has been avoided so far. In June, short-time work stood at around 52,000 employees - only slightly above the pre-corona level. Instead, numerous companies are planning to hire new staff and are reporting increasing recruitment problems due to a shortage of skilled workers.
"This is a clear sign that, despite all the obstacles and challenges, machine and plant manufacturers are committed and willing to increase their production and serve their customers promptly wherever possible," adds Wiechers.