Supply shortages hold back German third-quarter growth

interior of modern kitchen in office
Photo by Max Vakhtbovych on

Supply bottlenecks hampering German manufacturers held back German output in the third quarter, data showed on Friday.

Europe’s largest economy grew by 1.8% quarter on quarter in adjusted terms, the Federal Statistics Office said. That fell short of a forecast for 2.2% in a Reuters poll.

Growth in the second quarter was revised up to 1.9% from 1.6%, and the economy remains 1.1% below its pre-pandemic level.

Supply shortages are preventing some manufacturers with full order books from producing at full capacity, and rising energy prices are driving up consumer prices, raising concerns of weak growth as winter approaches.

But the economy is expected to remain in growth territory as sectors like gastronomy, tourism and entertainment shuttered for months during the pandemic cater to pent-up demand.

The 1.8% quarterly expansion reflects strong activity in the services sector during the summer months, Fritzi Kohler-Geib of KfW bank said.

“Without the stubborn material bottlenecks that restricted the producing sector in particular, the growth in economic output could have been even higher,” she wrote in a note. “Unfortunately, the supply-side distortions will probably only ease next year.”

Was it worth reading? Let us know.