(Bloomberg) --

German factory orders plunged in August, in a sign that severe material shortages and longer delivery times are keeping customers away.

Demand declined by 7.7%, exceeding all forecasts in a Bloomberg survey. Supply bottlenecks affected makers of cars and carparts in particular -- they saw orders fall 12% from the previous month. 

The report suggests the recovery in Germany’s manufacturing-heavy economy is likely to face speed bumps for months to come. Rapid rebounds from coronavirus lockdowns across the world have led to a shortage of inputs as well as delivery delays.

Daimler AG has said they expect bottlenecks to persist into next year, and Volkswagen AG’s main plant in Wolfsburg might face historically low output in 2021. 

Business confidence continued to deteriorate in September amid the combined forces of emerging coronavirus variants, supply squeezes and a lack of shipping capacity.

Inflation in the country is at the highest rate in nearly three decades, a report showed last week. So far, policy makers have insisted that the spike is largely transitory, but have recently warned of the risk of more persistent price pressures.

The economy ministry said weakness in demand in August might partially reflect strong bulk orders during previous months and plant holidays. 

Foreign demand dropped 9.5%, driven by a slump outside the euro zone. Domestic orders fell 5.2%. On the year, orders were still up nearly 12%.

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