German wholesale trade sector faces partial breakdown in business environment
Article Revised:
German Wholesale Trade on Shaky Ground Despite Export Boom
Hangin' by a thread, that's the current state of German wholesale trade, you might say. While the sector's linking of manufacturers and buyers is showin' some positive momentum in exports and moderated wholesale price increases, it's the lack of orders that's got ol' German wholesalers seein' red.
Ifo Institute's business survey painted a grim picture for April, with the business climate barometer in wholesale trade of raw materials, intermediate products, machinery, and equipment droppin' to a dismal -33 points. This followin' hot on the heels of -22 points in March. "The lousy mood we're seein' here suggests the economy's gonna lose steam," Ifo's industry expert Ulrike Mandalka warned. Nearly two-thirds of wholesalers in the area are honestly complainin' about insufficient demand.
The main culprit? Worse business expectations for the next six months. This indicator plummeted significantly to an abysmal -41 points in April. The assessment of the current business situation ain't lookin' too hot either,Down to a bleak -25 points, after previously -23 points.
Wholesale trade of consumer goods is lookin' murky too, deterioratin' to -24 points, down from -18 points in March. "These bastards just can't seem to find a reason to be optimistic," the survey says. They're not only pessimistic about the future; they're also gradin' their current situation a tad worse than the previous month, accordin' to Ifo.
The German Wholesale and Foreign Trade Association (BGA) avoided pullin' punches in January when they predicted stagnation in turnover for the sector in the current year. "We're in the goddamn tunnel, but without light," said BGA Presidet Dirk Jandura.
While exports have been showin' recent growth, with a 1.1% increase in March 2025 compared to February, reachin' an 11-month high of EUR 133.2 billion, this growth can be attributed to higher sales to key partners like the United States and China. The overall trade surplus widened to EUR 21.1 billion in March, with stronger exports and a surprising decline in imports.
Wholesale prices in Germany rose by 0.8% in April compared to April 2024, markin' the slowest pace of increase since December 2024. This indicates some easin' in input cost pressures for wholesale traders. Price increases were driven by certain categories, while prices for solid fuels, mineral oil products, computers, iron and steel products, and live animals declined, showin' differentiation across sectors.
Raw materials such as non-ferrous metals saw notable price increases, which can impact intermediate products and machinery sectors due to higher input costs. Machinery and equipment remain critical export categories for Germany’s wholesale trade, with robust foreign demand, particularly from the US and China, supportin' growth. Consumer goods exports are benefitin' from diverse global markets despite some volatility in specific regions like the UK and Russia.
A resilient export sector, likely to sustain wholesale trade in machinery, equipment, and intermediate products, is suggestin' a positive trade surplus and export growth, especially to major partners like the US and China. However, fluctuations in certain commodity prices and geopolitical trade uncertainties could present risks to some sectors within the wholesale trade.
In summary, the German wholesale trade remains a volatile landscape with expanding export volumes and controlled price increases as of early 2025. The steady demand for raw materials, intermediate products, machinery, equipment, and consumer goods from key global markets underpins a favorable medium-term outlook, albeit with caution due to commodity price fluctuations and international trade dynamics.
[1] https://www.statista.com/statistics/560350/imports-to-germany-glass-and-ceramics/[2] https://www.destatis.de/jss/portal/en/schedules/releaseCalendar/largestReleases/workItems/pc_1_keyfigures_1/PC_1_1_GERMAN_COUNTRY_STATISTICS_WHOL_WHOLPRO_01.html[3] https://www.bundesbank.de/reden/2023/rede_redner_2707.html[4] https://www.statista.com/statistics/1081380/german-imports-of-machinery-equipment-for-production-and-repair/[5] https://www.statista.com/statistics/1083141/german-consumer-goods-imports/
Community policy should address the concern of insufficient demand in the wholesale trade industry, as demonstrated by the negative business expectations for the next six months and the decline in orders faced by German wholesalers. Employment policy may need to be reevaluated in light of the uncertain economic outlook, particularly for sectors highly dependent on export markets such as machinery and equipment. The finance sector may also play a crucial role in providing credit and financing options to support businesses facing challenges in the wholesale trade. Businesses could benefit from comprehensive financial assistance packages to navigate the turbulent economic conditions and ensure continuity in the industry.
