Holger Schwannecke says that the business outlook for the coming year suggests a decline in the skilled trades industry. However, the current economic situation is still excellent. (Photo: © dolgachov/123RF.com)
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7 November 2019
The economic situation in the skilled trades sector is currently still excellent. However, the business outlook for next year suggests a slowdown.
Contrary to the overall economic trend, the economic situation in the skilled trades remains very good. However, a certain degree of skepticism is now slowly spreading – at least in some trades. These are the key findings of the 2019 Autumn Economic Report from the German Confederation of Skilled Crafts (ZDH). Holger Schwannecke speaks of an emerging slowdown in economic momentum . "The economic boom in the skilled trades is currently still ongoing. A stable economic development in the skilled trades sector is expected until the end of 2019," says the ZDH Secretary General. For the year as a whole, the ZDH anticipates a four percent increase in revenue and a slight rise in employment.
However, the business outlook for the next year suggests a decline in the skilled trades sector . This decline is not expected to be as severe as in other sectors. Nevertheless, the outlook for 2020 is fraught with uncertainty: "Industrial activity is crucially dependent on foreign trade – which continues to be burdened by trade disputes and the vacillating Brexit process . Should further negative factors emerge, domestic demand would also be affected, impacting the skilled trades sector," warns Schwannecke. The skilled trades sector now expects stronger economic policies from policymakers, focusing on strengthening competitiveness to maintain or revitalize the economy.
Regarding the economic indicators, the German Confederation of Skilled Crafts (ZDH) writes in detail: The current business situation remains at an excellent level. 62 percent of business owners are currently reporting good business, while only seven percent report poor business. The construction and interior finishing sectors continue to perform particularly well : 97 percent of business owners in these trades report a good to satisfactory business situation, with "good" being the most prevalent, at 73 percent in construction and 72 percent in interior finishing.
High levels of satisfaction with the current business situation are also found among food-related trades (92 percent report good to satisfactory business) and consumer-oriented private service providers (88 percent good to satisfactory). Tradespeople serving commercial needs are increasingly feeling the effects of the economic downturn in industry; 88 percent rate their current business situation as good or satisfactory, compared to 94 percent in the autumn of last year.
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The situation in the automotive sector is also viewed more cautiously. 42 percent of business owners rate their current business situation as good, fewer than the 49 percent reported last year. At the same time, 47 percent now describe business as satisfactory (compared to 41 percent in autumn 2018). Capacity utilization remains at an all-time high of 84 percent , particularly high in construction (90 percent) and interior finishing (89 percent). In these trades, there is still hardly any spare capacity. Consequently, waiting times for tradespeople remain long.
Across all trades, it now takes an average of 9,1 weeks to complete an order. In the construction and finishing trades, customers have to wait even longer: 13,4 and almost 10,6 weeks, respectively. Commercial suppliers average 9,6 weeks for order fulfillment. With the exception of the automotive trades , whose workshop business is weak, all trade groups reported increased sales in autumn 2019. Due to higher wages and additional labor costs, as well as increased purchase prices for raw materials, supplies, and especially energy, price increases remain necessary. 27 percent of businesses reported higher sales prices.
The willingness to hire in the skilled trades remains high; however, businesses would create even more additional positions if the necessary skilled workers were available. Increased caution is already evident in personnel planning due to the overall economic slowdown . Nevertheless, skilled trades businesses intend to continue hiring if qualified personnel are available. Investment activity in the skilled trades is currently only slightly below the all-time high of autumn 2018. On balance, all trade groups invested more in the third quarter of 2019. However, almost all trade groups are more cautious in their investment planning.
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