In Germany, a country renowned for its punctuality and reliability, people are now complaining about train delays, noticeable bureaucracy, and a general shortage of employees.
Even the famously diligent statisticians are increasingly perceived as "unreliable."
The Federal Statistical Office of Germany (Destatis), established in 1948, is one of the benchmarks in global statistical expertise.
However, for the past four months, Destatis has suspended the release of a series of key economic indicators after an error in a data update.
As Germany strives to promote economic growth, the public and economists lack sufficient data to make informed judgments.
Jörg Krämer, Chief Economist at Commerzbank, commented, "In the past, there were aspects of life that could be relied upon, and the timely release of official statistics was one of them, but not anymore."
Many German experts and business people are pessimistic about the current ruling coalition's governance capabilities, believing that its economic prospects face challenges.
Professor Zheng Chunrong, Director of the Institute for German Studies/European Union Studies at Tongji University and Director of the Center for German Studies, told Yicai Global that Germany's economy is indeed facing some difficulties, and some inherent problems have not been resolved, including outdated infrastructure in many German states, insufficient investment in new technologies, and complex bureaucratic procedures.
A businessperson who has been operating in Hamburg, Germany, for many years expressed nostalgia for the prosperous times of the German economy in the past, but acknowledged that the present is not as good as it used to be.
Why did Destatis make a mistake in 2023, on the 75th anniversary of its establishment?
The new director of the Federal Statistical Office, Ruth Brand, stated in her speech: "In times of crisis, the value of official statistics is particularly evident.
Our data is the best approximation of reality, an important basis for knowledge-based discussions, and an effective tool against false information."
However, less than a year later, since May of this year, Destatis has not updated German retail and wholesale sales data, as well as related data on the income of the service industry, hotels, car dealerships, and car repair shops.
These indicators, which are published monthly and adjusted for seasonal changes, are an important part of Germany's Gross Domestic Product (GDP) and are crucial for assessing the consumer demand of the EU's largest economy.
Historical data shows that in 2023, private consumption in Germany accounted for 52.7% of Germany's output, with retail sales accounting for 28% of private consumption, but it shrank by 3.4% compared to the same period last year.
Data from the Federal Statistical Office shows that in 2023, Germany's GDP overall declined by 0.3%.
Destatis stated that the reason for the data interruption was Information Technology (IT) issues, as well as complex adjustments to business statistical methods by the EU to improve accuracy.
Since the EU issued directives in 2019, Destatis has been working on the project, but a series of malfunctions, data issues, and IT delays mean that the statistical office has been unable to release retail sales and other service data for four months.
A key factor is that the income of companies operating both in the service industry and manufacturing will now be reported differently.
In the past, all income was considered as either service or manufacturing, depending on which part was larger.
Destatis stated in media interviews that this change will greatly improve the reporting of economic data, but since May, complex changes and data failures have made it impossible to release reports using the old methods.
Robin Winkler, Chief Economist at Deutsche Bank, said, "For months, we have been flying blind, unable to get a good understanding of the service industry."
Christian Schulz, a Eurozone economist at Citigroup, said, "We actually have no timely hard data on German private consumption."
The reason is that consumer surveys are considered a less reliable indicator by economists, and consumption data in the quarterly GDP data is delayed by two months.
Frustrated economists have raised their complaints in informal discussions with the German government, but oversight of Destatis is scattered among its various ministries.
The lack of retail sales data also complicates Destatis's calculation of the second-quarter GDP, forcing statisticians to use pre-sales tax data from retail groups instead of retail sales data to estimate private consumption.
Since late August, Germany has begun to re-release various data series using new methods, but so far, only the raw data for retail sales in May and June has been published.
The seasonally adjusted data has not yet been released, and seasonally adjusted data is necessary for meaningful trend comparisons.
Greg Fuzesi, head of Eurozone economic research at JPMorgan, said that the data interruption "obviously does not help to understand consumer demand."
He also said that retail sales data has always been prone to large revisions.
"This has long been a difficult challenge to manage," he said.
According to sources familiar with its plans, Destatis aims to resume normal reporting by the end of September or early next month.
The office stated that user complaints are understandable, but they are "doing everything possible to restore our standard reporting cycle as quickly as possible."
According to the latest statistical data, after a slight increase in the spring, Germany's GDP decreased by 0.1% in the second quarter.
Insufficient fixed asset investment and weak foreign trade were the main reasons for the downward trend of the German economy in the second quarter, while German consumption increased by only 0.1% during the same period.
Some economists even predict that there may be a further decline in the third quarter.
Some statisticians believe that one of the reasons for the contraction of the German economy in the second quarter is insufficient equipment investment, and consumers are not confident in spending.
Experts interviewed by Yicai Global believe that the main challenges facing the German economy currently come from three aspects: an aging population, energy prices weakening the country's competitiveness, and a lack of investment.
In addition, some experts also believe that Germany lacks momentum in economic transformation.
Clemens Fuest, Director of the ifo Institute, a German think tank, told Yicai Global that Germany will not be able to maintain the pace of economic green transformation because the public is unwilling to bear this burden.
"And the economic impact of slowing down the transformation will depend on the way it slows down.
Slowing down the transformation plus more certainty about future transformation policies may have a positive impact on the economy.
However, if there is more uncertainty about future investment conditions and decarbonization steps, it may further slow down current investment," he said.
The famous German economist Stahl also pointed out in a recent interview that over the past few decades, Germany has not made efforts to diversify its industries, nor has it paid attention to the development of new industries.
Its economy is still dominated by industries from the old era, such as automobile manufacturing, mechanical engineering, and the chemical industry.
The aforementioned businessperson who has been operating in Hamburg, Germany, for many years, also said that the European economy is currently in recession, German consumption is weak, and the economy lacks momentum.
For example, she recently saw a very prosperous department store in Hamburg that has been demolished.
According to her understanding, a friend who was an agent for first-line brand bags inside has filed for bankruptcy.
Moreover, Germany's strong employee protection rules are covering up worrying changes in the German high-wage manufacturing job market.
Data from the Federal Employment Agency shows that after hitting a historical low of 4.9% in the spring of 2019, Germany's unemployment rate has now risen to 6%.
Although this figure is still lower than the average level of the Eurozone and less than half of the unemployment rate at the beginning of the 21st century, economists and lawyers believe that the labor market situation is worse than the numbers show.
They warn that these numbers cover up the reduction of high-skill, high-income manufacturing jobs, and there will be more troubles in the future as industrial giants strive to cope with high energy prices, weak exports, and technological changes.
For example, Volkswagen previously announced plans to abandon its commitment not to lay off workers before 2029 and consider closing its factories in Germany.
The number of employees in the German automotive industry peaked in 2018 and fell by 6.5% last year, to 780,000.
As competition from foreign electric vehicle brands poses a challenge to Volkswagen, Mercedes-Benz, and BMW, the number of employees in this industry may decline further.
The domestic supplier network of German car manufacturers has been severely affected.
A survey of 50 suppliers conducted by consulting firm Horváth in August this year showed that 60% of suppliers plan to reduce German employees within the next five years.
Continental Group, Germany's third-largest supplier with an annual revenue of 14.14 billion euros, has decided to exit the automotive parts business and focus on tire business.
While preparing to spin off the sensor and braking system department, the company is laying off thousands of employees.
In other industries, according to media calculations, large companies such as SAP, Miele, and Bayer have announced more than 55,000 layoffs this year, but some of them are in areas outside of Germany.
Other industrial giants such as Thyssenkrupp and BASF are negotiating with trade unions to prepare for layoffs, but the number of layoffs has not yet been disclosed.
Zheng Chunrong said that in Europe, Germany's industry faces a certain threat of hollowing out, and under the condition of high costs, German manufacturing enterprises may move their production bases to the United States and other places.Freshfields Bruckhaus Deringer (FBD) law firm partner Ulrich Sittard provides layoff consulting for some large German companies.
He said that in the past two years, his work related to layoffs has doubled.
"My view is that the layoff rate of German blue-chip companies has risen to the highest level since the financial crisis."
Blue-chip companies refer to those with stable operating performance and high cash dividend payment capabilities.
Representative enterprises in Germany are generally Deutsche Bank, Siemens, and BASF, among others.
