No. 2009-08 August 2009
Chemicals Trends Report
Top Indicators
Dr Moncef Hadhri: mha@cefic.be
Business climate of EU chemicals continues to recover
Output in the EU chemical industry (excluding pharmaceuticals) decreased by 12.4% in June 2009 in a ‘yearon-year’ comparison. All chemicals sectors (except pharmaceuticals) registered an output decline ranging from 8.1% to 18.1%. Polymers and Basic Inorganics registered the biggest drop. Price data shows that chemical products (excluding pharmaceuticals) were 2.7% less expensive in the first six months of this year compared to the same period of 2008. Chemicals sales went down in June of this year compared to June 2008. The chemicals confidence indicator increased in August by 7% points compared to July 2009. This is the fifth improvement since March 2009. The indicator nevertheless remained at a very low level. In August, the EU Economic Sentiment Indicator (ESI) continued to improve, registering the fifth consecutive increase since the trough in March. The Ifo World Economic Climate Indicator rose in the third quarter of 2009 for the second time in succession. The rise in the indicator was primarily the result of the clearly more favourable expectations for the coming six months. But also the appraisals of the current economic situation have improved slightly for the first time since the third quarter of 2007.
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Chemicals production: declined in June 2009
Output in the EU chemical industry (excluding pharmaceuticals) decreased by 12.4% in June 2009 in a ‘year-on-year’ comparison. All chemicals sectors (except pharmaceuticals) registered an output decline ranging from 8.1% to 18.1%. Polymers and Basic Inorganics registered the biggest drop. Specialty chemicals and consumer chemicals recorded a less significant decline. When considering the first half of the current year, output in the EU chemicals industry (excluding pharmaceuticals) experienced a decline of 18.6% compared to the same period of 2008 (Data source: Eurostat). Read More (Slides 4-13)
Chemicals sales declined in June 2009
In a ‘year-on-year’ comparison, the growth rate of June 2009 was 20% lower compared to June of last year. From January to June 2009, European chemicals sales (excluding pharmaceuticals) were 24.7% down compared to the same period of 2008 (Data source: Eurostat).
☺ Chemicals confidence continues to pick up in August 2009
The chemicals confidence indicator increased in August by 7% points compared to July 2009. This is the fifth improvement since March 2009. The indicator nevertheless remained at a very low level, pointing to another negative outcome for year-on-year industrial production growth in August, after the record fall registered in December 2008. Given the current levels, it also suggests that annual production growth will remain clearly subdued in August. Read More (Slides 18-21)
Chemicals producer prices went down in June 2009
Price data shows that chemical products (excluding pharmaceuticals) were 2.7% less expensive in the first six months of this year compared to the same period of 2008. In a ‘yearon-year’ comparison, the growth rate of June 2009 was 5% lower compared to June of last year (Data source: Eurostat). 1
The rise in the confidence indicator reflects an overall improvement. In particular, managers' perception of the production trend observed in recent months and their production expectations increased. The improvement has been particularly strong for the production trend and the assessment of order-book levels which continued to improve. Managers' opinion of stocks of finished goods improved as well (Data source: European Commission).
The increase in the ESI resulted from a general improvement in sentiment in all sectors in the EU. Services gained considerably (+8 points). Industry continued to improve from the trough in March, climbing by 4 points. Sentiment among consumers and in construction also registered a marginal improvement of 1 point. Retail trade picked up (+2). The majority of the Member States registered an improvement. Among the largest Member States, the UK (+9.7 points), the Netherlands (+7.6) and Germany (+5.1) recorded the most significant increases in sentiment, though the rise was also noteworthy in Poland (+4.5), Italy (+3.8) and Spain (+2.9).
☺ Economic sentiment shows further improvement in August
In August, the EU Economic Sentiment Indicator (ESI) continued to improve, registering the fifth consecutive increase since the trough in March. The ESI increased markedly – by 5.9 points in the EU to 80.9. However, the level is still far below the long-term average. Recovery of the industrial confidence indicator continued, backed by a sharp increase in production expectations and manufacturers' assessment of order books. Managers' assessment of the level of stocks also showed an improvement. Nonetheless, stocks of finished goods, production expectations and order books remain well below their long-term averages. The financial services confidence indicator – not included in the ESI – moved up by 7 points in both areas. While managers' expectations of demand for the next three months and assessment of that over the past three months improved markedly, their assessment of the business situation fell back substantially after the improvement registered last month. The financial services confidence indicator is calculated in the BCS (Business and Consumer Survey) programme as the arithmetic average of the balance (in % points) of the answers to the questions on business climate (Q1) and on recent (Q2) and expected (Q3) evolution of demand).
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The current economic situation is assessed as definitely unfavourable in all major regions. In the euro area, Central and Eastern Europe and Russia, the current economic situation has even been assessed as somewhat worse. (Results of the Ifo World Economic Survey (WES) of the third quarter 2009 in co-operation with the International Chamber of Commerce (ICC), Paris)
While managers' assessment of the business situation (Q1) and demand over the past three months (Q2) improved markedly, expectations of demand for the next three months (Q3) decreased substantially compared to the improvement registered last month. (Data source: European Commission, Business and Consumer Survey Results, August 2009)
☺ The Ifo World Economic Climate Indicator rose in the third quarter of 2009 for the second time in succession.
The rise in the indicator was primarily the result of the clearly more favourable expectations for the coming six months. But also the appraisals of the current economic situation have improved slightly for the first time since the third quarter of 2007.
The economic expectations in North America and Asia are particularly optimistic. But also in Western Europe, Russia and Latin America, the expectations for the coming six months have again been revised upwards. In contrast, the economic expectations in most of the countries of Central and Eastern Europe remain negative, albeit somewhat improved over the previous quarter.
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