German enterprise morale down on provide shortages, virus fears By Reuters

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© Reuters. FILE PHOTO: The skyline with the financial district is photographed during sunset in Frankfurt on April 22, 2020 as the spread of the coronavirus disease (COVID-19) continues. REUTERS / Kai Pfaffenbach

BERLIN (Reuters) – German business morale unexpectedly fell in July due to ongoing concerns in the supply chain and rising coronavirus infections, a poll on Monday found.

The Ifo Institute announced that its business climate index fell from 101.7 in June to 100.8. An analyst survey by Reuters had indicated a July value of 102.1.

“The mood in the German economy has clouded over,” said Ifo President Clemens Fuest in a statement.

Supply problems are a burden for the manufacturing industry and trade, with almost 64% of industrial companies complaining about material shortages, according to the institute.

Companies assessed their current situation somewhat better, but optimism about the coming months subsided.

The Ifo Expectation Index fell to 101.2 from 103.7 in June, while the Current Conditions Index rose from 99.7 to 100.4.

Events such as the COVID-19 pandemic, natural disasters in China and Germany, and cyberattacks have conspired to push global supply chains to a limit and threaten the fragile flow of raw materials, parts and consumer goods, according to companies, economists and shipping specialists.

The tourism and consumer industries in particular were concerned about a fourth wave of coronavirus.

After more than two months of steady decline, COVID-19 cases in Europe’s largest economy have been on the rise since early July, mainly due to the spread of the more contagious Delta variant.

About 60% of the 83 million people in Germany have had their first vaccination with a COVID-19 vaccine, and about half of them are fully vaccinated.

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