By Michael Nienaber

BERLIN, (Reuters) – German business spirits slipped for the fifth straight month in November due to supply issues in the manufacturing sector and a surge in coronavirus infections. This reflected in a Wednesday survey.

According to the Ifo Institute, its index of business climate fell from 97.7 October’s readings to 96.5. According to Reuters, 96.6 was the expected reading in November according to an analyst poll.

Clemens Fuchs, President of Ifo said that “supply bottlenecks” and “the fourth wave coronavirus challenge German companies.”

Survey results showed that company executives felt less content with their current business conditions and had lower expectations for the six months ahead.

German carmakers and others are being forced to cut production, despite high demand.

Thomas Gitzel from VP Bank said that “Industrial production suffers from the shortage in materials and with the vicious fourth coronavirus outbreak, a well-known Stress factor for the services sector is now being added.”

Gitzel stated that all indicators point to a decrease in economic output for the fourth quarter.

Klaus Wohlrabe from Ifo was slightly less optimistic, saying that the economy is set to stagnate during the fourth quarter due to supply chain bottlenecks showing no signs of improving.

Wohlrabe stated to Reuters, that tourism and the hospitality industry were in tough times due to the new restrictions placed across the country. The changes are meant to reduce the rise in COVID patients and prevent hospitals reaching their maximum capacity.

German central banks warned Monday that the economy may stagnate in the fourth quarter this year, due to lack of labour and goods as well new restrictions against the pandemic.

These figures were in contrast to a survey of purchasing managers that had indicated on Tuesday that Germany’s private sector growth picked up in November, despite continued supply bottlenecks.

Ralf Umlauf is an economist at Helaba bank. He said Germany was being hit more by the supply chain bottlenecks then France. France’s business spirit improved in November.

Umlauf stated that this grim outlook could be seen by the European Central Bank to confirm its cautious approach of keeping as many possible policy options open, despite rising inflation rates.