Germany's Industrial Output Faces Potential Decline Amid Inflation Concerns

Phil Smith, Deputy Director of Economics at S&P Global Market Intelligence, noted on May 4 that panic buying to secure supplies amid fears of future price hikes and shortages continues to support Germany's output and new orders. According to Jin10, this preemptive activity may lead to some pullback in the coming months. While there is strong growth in new orders for intermediate goods, which are used to produce other products, demand for consumer goods has significantly declined. The number of companies expecting a decline in activity over the next year now exceeds those anticipating growth. Concerns are rising that soaring inflation pressures and the related squeeze on purchasing power will dampen demand. In April, inflation in industrial producer prices surged to its highest level in over three years. Meanwhile, supply delays have reached levels not seen since mid-2022, posing a risk of production cutbacks regardless of demand conditions.