The business climate within Germany’s chemical industry has continued to deteriorate, according to the latest data released by the Ifo Institute. Their industry index dropped to -19.2 points in July, a significant decline from -9.5 points recorded in June.
The assessment of the current situation has also worsened, falling from -26.0 to -28.8 points, marking the lowest level in two years. Simultaneously, expectations have shifted back into negative territory, decreasing from +8.6 to -9.2 points.
“The brief optimism within the chemical sector regarding a cyclical recovery has dissipated” stated Anna Wolf, Ifo Institute industry expert.
The ongoing weakness in broader industrial activity is weighing heavily on demand for chemical products, both domestically and internationally. Companies are reporting historically low order backlogs, reaching their lowest point since the financial crisis of 2009.
Adding to the challenges, businesses are now factoring in further job cuts and expectations for employment have declined. Geopolitical uncertainties continue to impact the sector, notably the ongoing trade disputes with the United States.
“While the industry has managed to slightly improve its competitive position, the imposition of new tariffs on chemicals and pharmaceuticals is significantly impacting business in the US market” Wolf added.