The business climate within Germany’s chemical industry deteriorated in October. According to the Ifo Institute, the index fell to -5.9 points, a sharp reversal after registering +3.0 points in September.
Chemical companies are now evaluating their current business situation less favorably. Their indicator sank to 2.4 points from 7.5 points in September. Most notably, business expectations worsened significantly, dropping to -13.8 points from -1.5 points. Anna Wolf, an industry expert at Ifo, noted that concerns among companies include necessary restructuring and plant closures.
Despite this pessimistic outlook, there are areas of strength. Demand increased compared to September, and new orders have risen. Consequently, companies plan to expand their production and continue increasing prices. Furthermore, they managed to utilize their capacities much better, reaching 76.6 percent after standing at 73.4 percent in the previous quarter.
However, the source of these orders varied: those in October primarily originated from the domestic manufacturing sector, while international trade proved weaker. While chemical companies assess their profitability situation less negatively than they did during the first half of the year, planned personnel reductions are still ahead due to required restructuring efforts. Wolf concluded that the fundamentally strained competitive environment, both domestically and internationally, remains unchanged.
