Timber Trouble: German Sawmill Industry Braces for Uncertain Times Ahead

"The German Wood Industry Faces Growing Concerns as Optimism Wanes for the Coming Half-Year"

The mood in the German wood industry took a slight downturn in January 2024. While companies expressed greater satisfaction with the current business situation compared to the previous month, they were more pessimistic about the upcoming six months. Concerns were particularly raised among companies in the German sawmilling industry and construction-related segments of the wood industry due to the significant decline in demand for construction.

Simultaneously, the decreasing inflation rate and rising real incomes had a positive impact on expectations within the furniture industry and the wood-based materials industry. The assessment of the overall economic situation also remained stable, with companies expressing cautious optimism.

According to the ifo Institute’s survey, the business climate index for the wood industry increased from 98.6 points in December 2023 to 99.7 points in January 2024. This slight improvement was mainly driven by the more positive assessment of the current business situation, which rose from 97.0 points in December to 98.4 points in January. However, the expectations component of the index, which measures the outlook for the next six months, decreased from 100.3 points to 101.0 points, reflecting the growing concerns about future demand.

Within the sawmilling industry, the business climate index fell from 98.6 points in December to 97.8 points in January. This decline was primarily attributed to the more pessimistic expectations for the coming months. Companies in this sector expressed worries about the declining demand for construction, which directly affects their business.

Similarly, construction-related segments of the wood industry also experienced a decrease in the business climate index, dropping from 98.6 points to 98.0 points. The decline was mainly driven by the deteriorating expectations for the future. The ongoing decline in demand for construction projects has raised concerns among companies operating in these segments.

On the other hand, the furniture industry witnessed an improvement in the business climate index, rising from 98.6 points in December to 99.1 points in January. This increase can be attributed to the positive expectations for the coming months. The declining inflation rate and rising real incomes have contributed to a more optimistic outlook in this sector.

The wood-based materials industry also experienced a positive shift in the business climate index, increasing from 98.6 points in December to 99.6 points in January. This improvement can be attributed to the more positive expectations for the future. The declining inflation rate and rising real incomes have had a favorable impact on the outlook for this industry.

Overall, the German wood industry remains cautiously optimistic despite the growing concerns about future demand in the sawmilling industry and construction-related segments. The furniture industry and the wood-based materials industry have benefited from the declining inflation rate and rising real incomes, leading to a more positive outlook. The ifo Institute’s survey reflects the current sentiment within the industry and provides valuable insights into the challenges and opportunities that lie ahead.

John O Mahony

John O Mahony

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