But behind this overall forecast there are very different developments in the individual sectors, as can be seen in the overview of the most important economic sectors.
The German retail sector accounts for around a quarter of private consumption and thus around 17 percent of the gross domestic product in Germany – if consumers are doing well, trade is flourishing, and with it the entire German economy, one might assume.
But it is not that simple. In the second year of the pandemic, private consumption is likely to have risen noticeably again, and the retail sector will probably also have the next record year – despite the sometimes immense delivery problems in the Christmas business.
At the same time, the fear of shop closings and dying city centers is rampant. The reason: More and more people are shopping online. According to the latest figures for the first ten months of the year, Internet trade increased by 16.1 percent, while sales in stationary retailing fell by 1.9 percent in real terms.
The enormous delivery problems made matters worse: 81.6 percent of retailers complained in December that not all goods ordered could be delivered. “The retail sector is currently being burdened twice,” said Ifo expert Klaus Wohlrabe. “Retailers cannot offer all products. And customers are reluctant to shop in view of the high incidences. “
According to the HDE trade association, the Christmas business was “a disaster” for retailers. In the week before Christmas, sales in stationary non-food retailing under 2G conditions remained an average of 35 percent below the pre-crisis level. The clothing trade was particularly hard hit.
The HDE consumption barometer promises a cautious start to the new year. The index fell slightly to 95.04 points. The barometer has been falling almost steadily since its interim high in July. The barometer is calculated monthly for the HDE by the Handelsblatt Research Institute. It is based on a representative consumer survey.
car industry
The industry is in the midst of the greatest transformation in its history. At least in Europe, the end of the internal combustion engine has in fact been politically decided. Nevertheless, the vast majority of new customers today still want a car with a modern gasoline or diesel engine. In addition to this structural change, the auto industry is struggling with raw material prices, which have fluctuated sharply for months – and above all the acute shortage of semiconductors.
It is estimated that around four million fewer vehicles will be built in 2021 than planned. The Association of International Motor Vehicle Manufacturers (VDIK) assumes that only 2.6 million new cars were registered in Germany last year – as few as last in the 1980s. In the pre-crisis year 2019, there were still 3.6 million new registrations. The result: in November every eighth employee in the auto industry was on short-time work.
It is estimated that around four million fewer vehicles will be built in 2021 than planned.
(Photo: Reuters)
“Customers wanted to buy more cars than the industry could produce,” says VDIK President Reinhard Zirpel. In the new year, the association expects the market to recover to around three million new cars – an increase of 15 percent. The prerequisite, however, is that the delivery bottlenecks normalize and the very high order backlogs at the manufacturers can be processed.
It is by no means certain whether this recovery will take place. Surveys by the Ifo Institute have not yet signaled any easing. Despite this mixed situation, VW, Daimler and BMW achieved a record profit of around 38 billion euros last year.
Mechanical and plant engineering
The mechanical and plant engineering sector is heading into the coming year “with a good dose of optimism”, says industry association president Karl Haeusgen. The mechanical and plant engineering association estimates that the pre-corona level should be reached again in 2022. In 2021, production is likely to have increased by around seven percent to 219 billion euros. This is anything but a bad value, but the association had expected a plus of ten percent in September. “We could have produced more if the various delivery bottlenecks hadn’t been so persistent,” emphasized Haeusgen.
In a survey by the association at the beginning of December, 84 percent of the companies said they felt noticeable or even serious impairments in the supply chain. There was mainly a lack of electronic components and metals. An extensive easing of the situation is not expected until the second quarter of 2022 at the earliest, with electronic components the companies do not expect this before the third quarter.
In view of the well-filled order books, the association nevertheless raised its forecast for 2022. He is now assuming a real increase of seven percent, in autumn he had expected a five percent increase. In the first year of 2020, which was shaped by the corona crisis, production fell by almost twelve percent.
The industry sees the shortage of skilled workers as a “very big challenge”. This year, 67 percent of the companies are planning to build up their permanent workforce – if they can find suitable staff. Already today, 70 percent of companies suffer from a noticeable or serious shortage of skilled workers. With a little more than a million employees, mechanical and plant engineering is the largest industrial employer in Germany.
Electrical industry
The German electrical and digital industry continues to be confronted with material shortages and delivery bottlenecks. “For three quarters of the companies surveyed, the situation has worsened in the past three months – for a third it has even worsened,” said industry association manager Wolfgang Weber. Around half of the companies expect the current situation to continue until mid-2022. Weber: “It sticks at almost every corner.”
The companies estimate that sales in the past year could have been up to ten percent higher without the shortages and logistics problems. Nevertheless, the association expects production to increase by eight percent in 2021. This would more than make up for the pandemic-related decrease in production of six percent in 2020.
The business climate in the German electrical and digital industry fell for the fourth month in a row in November. The current situation was assessed as somewhat better than in the previous month.
However, business expectations weakened further. For the next six months, 21 percent of electrical companies expected activities to expand, 61 percent to remain the same and 18 percent to decline.
Pharmaceutical and chemical industries
The chemical-pharmaceutical industry is expected to increase its production by 4.5 percent in 2021, sales even increased by 15.5 percent. The number of employees rose slightly by 0.5 percent to 466,500. “Our industry has withstood numerous headwinds and achieved a remarkable result,” said VCI President Christian Kullmann.
The industry association assumes that the positive development of the industry will continue in the new year. The industry considers a two percent increase in production and a five percent increase in sales to be realistic.
Nonetheless, a member survey shows that the business situation has deteriorated in the last few months: 30 percent of the companies are already reporting slight, five percent even significant cuts.
The rapid rise in gas and electricity prices in recent months is causing problems for the industry.
(Photo: dpa)
There is no shortage of orders, but the bottlenecks in preliminary products and logistics have worsened. Due to the supply chain problems, 35 percent of the companies had to cut back their production, ten percent have temporarily shut down plants. Over 70 percent of companies can only process orders with a delay, 39 percent cannot fulfill them at all. The companies do not expect the situation to relax until the summer of 2022.
The industry is also having problems with the rapid rise in gas and electricity prices in recent months: 61 percent of the companies surveyed reported that energy prices are currently significantly hampering their operations. 67 percent stated that they could at least partially pass on the costs to their customers.
Services
All in all, service providers are by far the most important branch of the economy. At around 70 percent, their share in gross value added is around three times that of industry. However, the service sector is extremely heterogeneous and also characterized by a large number of small companies, which makes general forecasts difficult.
For most service providers, 2021 was not a bad year. After sales in the second quarter of 2021 had reached the pre-crisis level of the end of 2019 for the first time since the start of the corona pandemic, they were 5.2 percent above the pre-crisis level in the third quarter of 2021.
The strongest increase in sales compared to the pre-crisis quarter was in the third quarter of 2021 in the area of transport and storage. Here, sales increased by 13.6 percent compared to the fourth quarter of 2019. The postal, courier and express services even generated 19.3 percent more sales than before the corona crisis.
On the other hand, things went badly for “other economic services”. These include, for example, recruitment and temporary work, travel agencies and organizers, private security services, building cleaners, call centers and trade fair and congress organizers. In the third quarter of 2021, their sales were still 9.5 percent lower than in the fourth quarter of 2019.
The information and communication sector, which includes, for example, the publishing, production, rental and distribution of films as well as music, cinemas, broadcasters and telecommunications providers, is now 4.7 percent above the pre-crisis level.
After the very strong third quarter, however, the service economy slipped again towards the end of the year. The Markit Service purchasing managers’ index fell to a ten-month low in December – and according to initial calculations, at 48.4 points, it was below the growth threshold of 50 points.
building
The German construction industry can look back on a mixed year 2021. The industry associations are assuming a nominal increase in sales of 0.5 percent. However, since prices rose by 6.5 percent, the slight nominal increase is transformed into a real minus of six percent.
Although the demand for construction services increased in the course of the year, problems with the procurement of materials had slowed growth. Overall, residential construction grew quite strongly with a plus of two percent. Turnover in commercial construction grew by one percent, while that in public construction fell by three percent.
Housing construction grew quite strongly overall.
(Photo: imago images / Rupert Oberhäuser)
The industry is looking to the new year with more confidence. In nominal terms, sales should grow by 5.5 percent. In view of the expected price increases of four percent, there is still a real increase of 1.5 percent. According to the association, the strongest impetus will again come from residential construction.
The latest survey by the London-based data provider Markit confirms the association’s assessment. According to this, Germany’s construction sector struggled in November with falling construction activity and declining new orders. The seasonally adjusted IHS Markit Construction Index – which summarizes the monthly changes in activity in the entire German construction industry in one value – stood at 47.9 points in November, almost unchanged from October and thus still below the growth threshold of 50.
Nevertheless, this was the best value since August 2020. Numerous survey participants stated that the pandemic had led to disruptions and interruptions. There were personnel shortages in many places due to illnesses, corona tests and vaccinations.
More: Less growth: The post-corona boom is failing in Germany