BVL Logistics Index Shows Further Recovery in the Second Quarter of 2021

The recovery of the business climate in the German logistics sector continued in the second quarter of 2021. The corresponding indicator was at 100.1 points in May, significantly above the pre-crisis level. This is evident from the monthly surveys on the logistics indicator conducted by the ifo Institute on behalf of the Federal Association of Logistics e.V. (BVL) as part of its economic surveys.

(Bremen) The increasing optimism was not only reflected in the assessment of the current situation of companies, which was significantly more positive than in the previous quarter. More and more companies expected a favorable business development for the remainder of the year.

Logistics service providers hardly complained about insufficient order volumes anymore and assessed the current business situation as good overall. Business prospects continued to brighten, leading to expectations of job creation. Overall, the business climate improved noticeably, and the indicator turned positive for the first time since mid-2019.

In trade and industry, the business climate has brightened significantly. The main indicator rose considerably and recorded 102.5 points. This was primarily due to positive assessments of current business, which increased significantly. Business expectations were also more optimistic. In the coming months, companies anticipated further business growth. Price planning indicated strong increases. After the industry had recovered significantly in the previous quarter, trade was now catching up. In connection with the easing of Corona restrictions, there was particularly strong optimism in retail. The wholesale sector was also able to expand its positive assessments, but to a lesser extent than retail.

Labor Market in May at Highest Level Since June 2019

After the German economy had quickly recovered from the first wave of Corona in the second half of 2020, it faced another setback at the beginning of this year. The second and third waves of Corona caused the gross domestic product (GDP) to decline by 1.8% in the first quarter of 2021 compared to the fourth quarter of 2020. The retail sector and contact-intensive service industries were particularly hard hit again. The situation improved with the rapid decline in new infection numbers. Retail was allowed to open under certain conditions in many places, which was also reflected in the ifo Institute’s estimates of short-time work. The number of short-time workers fell to 227,000 in May, down from 427,000 in January. In the hospitality sector, which had only been allowed to open to a limited extent, the decline in short-time work was less pronounced, with 88,000 employees (May: 489,000, January: 577,000). Overall, short-time work has been continuously decreasing since the beginning of 2021, having been reduced by over 40% since its peak in April of last year. The revival in the labor market is also reflected in the ifo Employment Barometer, which climbed to its highest level since June 2019 in May. German companies plan to hire new employees, especially in the industrial and service sectors.

Leading Indicators from the Federal Statistical Office

Similarly positive developments are shown by leading indicators from the Federal Statistical Office. Mobility data indicated a continuous increase in the mobility of the population since the beginning of the year, although the indicators are still significantly lower than in the summer of 2020. The transport index, which measures economic activity based on transport performance and complements the truck toll performance index with other modes of transport in freight transport, also indicated increasing overall economic activity since the beginning of the year. However, the daily available truck toll performance index weakened somewhat during May. Here, production difficulties in some industrial sectors related to supply bottlenecks are likely to be noticeable. This was reported by 45% of the industrial companies surveyed by the ifo Institute.

Overall, the available leading indicators suggest that the recovery of the German economy is likely to gain momentum. After large parts of the manufacturing sector boomed last year and are expected to somewhat throttle their strong production expansions in the coming months due to supply bottlenecks, retail, hospitality, and other contact-intensive service providers are now benefiting from the easing of the Corona crisis.

The Logistics Indicator

The logistics indicator is calculated by the ifo Institute on behalf of the Federal Association of Logistics e.V. It is derived from monthly economic surveys since 2005. To determine the indicator, more than 4,000 responses from logistics service providers (60% freight transport (excluding air freight); 40% freight forwarding and logistics) and from companies in the manufacturing sector (66%) and trade (wholesale: 17%; retail: 17%) as users of logistics services are used. The overall indicator is calculated equally from the results of providers and users. The survey design aims to assess the current business situation, developments in recent months, and expectations for the coming months. Typically, participants have three response options for each question, which can be characterized as positive-expansive, average-neutral, and negative-contractive. A balance is formed from the percentage of positive-expansive and negative-contractive responses. Accordingly, the balance can take values between -100 (all companies gave a negative-contractive response) and +100 (all companies gave a positive-expansive response). A balance value of 0 indicates that negative and positive responses are balanced. All questions relate to a seasonally typical assessment. Additionally, all reported figures are adjusted for the remaining seasonal pattern using a statistical standard procedure for seasonal adjustment (X13-ARIMASEATS). To calculate the index values of the business climate and the two components of business situation and expectations, the balances are each increased by 200 and normalized to the average of a base year (currently 2005).

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