The Purchasing Managers Index for the German economy (Markit PMI/S&P Global; first release for December) has just been published, showing German industry remaining deep in recession. For manufacturing: 43.1 (forecast was 43.2; previous month was 42.6)—all values below 50 mean contraction compared to the previous month. Services: 48.4 (forecast was 49.8; previous month was 49.6). Overall index: 46.7 (forecast was 48.2; previous month was 47.8).
The government-sponsored German Institute for Economic Research has corrected its forecasts downward for next year. Correcting forecasts downward is going to become economists’ most practiced activity. In detail, they now forecast a 0.6% growth instead of a 1.2% one.
It is a 50% correction downward and it is just the beginning. Daily news of industrial activities being terminated in Germany as a result of sanctions-induced energy crisis and green policies sound like a war bulletin. Particularly hit is the car industry, which today produces 40% less than 2019. Here is some news from the last days.
Volkswagen, the largest car manufacturer in the world, is now cutting several hundred jobs in Saxony. A spokesperson for the company announced in the media that the employment contracts of more than 500 employees will not be extended. Temporary employment contracts had already expired in the previous year. The reason given by VW was the discontinuation of production of electric car models Cupra Born and ID.3. These sold so poorly that they are no longer being produced.
Bosch, the world’s largest automotive supplier, is planning to cut at least 1,500 jobs over the next two years. This will affect the Feuerbach and Schwieberdingen sites in Baden-Württemberg.
Heinze Group, the automotive supplier from Herford is insolvent. The reason: Porsche, BMW and Co. cut back their production.
