Biz climate in German chemical industry worsens in Dec: ifo Institute

23 Jan '24

2 min read

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The business climate in Germany's chemical industry worsened in December, falling to minus 15.2 points from November's minus 13 points, the ifo Institute said.
The sector depends on Asia for a third of its imports from outside Europe.
And it is feeling the pinch from transit delays via the Red Sea due to attacks by Houthi rebels and the resulting escalation.

The business climate in Germany’s chemical industry worsened in December last year, according to the Leibniz Institute for Economic Research at the University of Munich (ifo Institute). It fell to minus 15.2 points, down from minus 13 points in November.

“Although the chemical industry seems to have bottomed out, there is still no sign of an impending upturn,” says industry expert Anna Wolf from the institute in a release.

The chemicals sector, the country's third-biggest industry with annual sales of around €260 billion ($282 billion), depends on Asia for around a third of its imports from outside Europe. And it is feeling the pinch from delayed shipments via the Red Sea due to attacks on commercial containers by Yemen’s Houthi rebels and the resulting escalation. Some companies have reportedly curbed production.

Companies were less negative about their current business situation in December than in the previous month, the ifo Institute says. However, their business expectations deteriorated significantly to minus 14.6 points, down from minus 6.5 points in November.

Chemical companies rated their order backlog as very low. They had recently been pinning their hopes on international business. These hopes have apparently been dashed, however, as expectations regarding orders from abroad have worsened.

Companies’ pessimism is also reflected in their personnel planning. Expectations here are at their lowest level since the 2008-2009 Financial Crisis. “The chemical industry faces the prospect of even greater job losses,” Wolf says.

The business climate cooled in other energy-intensive industries as well.

Fibre2Fashion News Desk (DS)

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