There were tentative signs of supply constraints easing last month but the bottlenecks that are persisting continue to hold back manufacturing output and growth conditions for the most part. Markit notes that:
"After a promising start to 2021, the German manufacturing sector's performance faded as the year went on as unprecedented supply chain constraints took their toll. However, although growth in December was only modest with supply shortages still an issue, the survey's output index has now ticked up in each of the last two months, to offer some hope that the final quarter of 2021 can be a turning point from which growth starts to pick up as we move through 2022.
"Buoyed by full order books, German manufacturers are confident about growth prospects in the coming year, though much still depends on an improvement in the supply situation.
"Latest data provided some signs of encouragement, as expectations improved, the incidence of lengthening lead times eased to an 11-month low, and firms were able to rapidly build up stocks of inputs. Nevertheless, supply chains remain under intense pressure by historical standards, and there's still a risk of fresh disruption as a result of flare-ups in the pandemic."
