ifo: Strong Improvement in Business Climate in Germany’s Chemical Industry in August

The business climate in Germany’s chemical industry improved sharply in August. The index rose to -2.4 points, up from -26.3 points in July. For the first time in four years, companies are even positive in their assessment of the business situation. The figure rose to +11.6 points, up from -14.6 points in July. Business expectations were also considerably brighter, rising from -37.2 to -15.5 points. “Supply failures in Asia resulting from the ongoing blockade of the Strait of Hormuz are driving up demand for German-made chemical products,” says ifo industry expert Anna Wolf.

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Since there are no signs of geopolitical tensions easing, companies expect this economic upturn to continue. Their production plans indicate an expansion in production. Export business is also continuing to gain momentum: The corresponding balance rose to +10.1 points, up from -22.7 points in July. At the same time, the supply situation has eased somewhat: In the third quarter, only 13.8% of chemical companies still reported material shortages, compared to one in three companies in the second quarter. However, structural problems such as high energy and location costs continue to burden the industry. As a result, companies expect further job cuts despite the upturn. “In the medium term, however, government infrastructure and investment programs could support demand for chemical inputs, as long as the announced projects are implemented swiftly,” says Wolf.

More information: www.ifo.de

ifo Institut für Wirtschaftsforschung e.V., München