Business Climate in the German Chemical Industry Improves
The business climate in Germany’s chemical industry improved in October. The index rose to -3.1 points, up from -13.0 points* in September. The improvement is attributable to significantly better business expectations. They rose to +4.7 points in October, up from -15.9 points*. Assessments of the current business situation remained virtually unchanged at -10.6 points, down from -10.1 points*. “Companies in the chemical industry are pinning their hopes on the German government’s electricity price package,” says industry expert Anna Wolf from the ifo Institute.
The electricity price package is intended to ease the burden on companies and strengthen the competitiveness of the German chemical industry compared to other countries. It includes, among other things, abolishing the EEG surcharge, expanding electricity price compensation until 2030, and other measures to reduce grid fees. These policy measures are viewed positively by the chemical industry. In October, chemical companies assessed their competitiveness less negatively than in July.
However, this is tempered by the economic weakness in manufacturing. Demand for chemical products remained subdued in October. The order backlog fell again, and capacity utilization dropped to its lowest level since 2009. Companies’ income assessments were increasingly critical. Against this backdrop, financing bottlenecks have increased, further inhibiting the willingness to invest in the sector. “It is right to ease the burden on chemical companies now in order to maintain production capacities in Germany throughout the economic crisis,” says Wolf.
*Seasonally adjusted
Publication
ifo Konjunkturperspektiven is a monthly German-language online publication that presents the latest results from ifo’s business surveys in the form of graphics and tables.
