Chemical Industry Sees Unexpected Surge

Chemical Industry Sees Unexpected Surge

Germany’s chemical industry has experienced a notable improvement in sentiment during June, according to the latest figures released by the Ifo Institute in Munich. The index measuring industry mood climbed to -8.9 points, a significant rise from -16.2 points recorded in May.

A particularly encouraging aspect of the data shows a substantial brightening of future expectations, jumping from -5.4 to 9.5 points – the highest level in two and a half years. While the current business climate remains subdued, registering at -25.7 points, the shift in outlook signals a growing sense of optimism within the sector.

“The planned reduction in electricity tax for industry is already providing a tangible boost to the chemical industry” noted Anna Wolf, a sector expert at the Ifo Institute.

Despite the rising confidence, its impact on the immediate business situation for many companies remains limited. Order backlogs continue to be viewed as exceptionally low. Although demand for chemical products has stabilized, a considerable number of companies are anticipating production declines and workforce reductions.

Certain firms are benefiting from lower raw material costs and early signs of demand recovery in international markets. However, the persistent burden of protectionist US trade policies, high domestic operating costs and ongoing geopolitical instability continue to weigh on the industry’s economic recovery. Wolf emphasized that “in this environment, the state investments recently decided by the German government are providing urgently needed impetus”.