Germany’s chemical industry has experienced a notable improvement in sentiment during June, according to the latest data released by the Munich-based Ifo Institute. The index measuring industry mood climbed to -8.9 points, marking a significant recovery from -16.2 points recorded in May.
A particularly encouraging shift is observed in future expectations, which surged from -5.4 to 9.5 points – the highest level in two and a half years. While the current business climate remains constrained, registering at -25.7 points, the upward revision in expectations signals a renewed sense of optimism within the sector.
Industry expert Anna Wolf attributed the positive sentiment, in part, to the planned reduction in electricity tax for industrial users. “This measure is already providing a tangible boost to the chemical industry” she stated.
Despite the improved outlook, the current performance of many companies remains challenged. Order backlogs continue to be viewed as exceptionally low and while demand for chemical products has stabilized, a considerable number of firms anticipate production declines and are considering workforce reductions.
Certain operations are benefitting from reduced raw material costs and initial signs of demand revival in international markets. However, the industry continues to grapple with headwinds including protectionist US tariffs, persistently high operating costs within Germany and pervasive geopolitical uncertainties that are tempering the pace of economic recovery. Wolf noted that “government investments, recently approved by the federal government, are providing much-needed impetus within this challenging environment”.
