(Reuters) - A slight recovery in the German chemicals sector lost momentum in the second quarter, a report by the VCI industry body said on Tuesday, as both domestic and foreign orders slowed in the April-June period, especially in the pharmaceutical branch.
"The global economy has not picked up speed as hoped," VCI's Managing Director Wolfgang Grosse Entrup said in a press release, adding that Germany's structural problems, such as high production costs, red tape and labour shortages, remain unresolved.
Overall production in the chemicals sector including pharmaceuticals added only 0.8% quarter-on-quarter, slowing down drastically from the January-March quarterly increase of 5%.
Germany's chemicals industry suffered heavily throughout 2023 due to high production costs and weak demand amidst high inflation. Europe's largest chemicals producer started showing the first signs of recovery in the first quarter of this year, which are now fading away.
Pharmaceutical output fell by 4% compared with the previous quarter.
On the annual comparison, overall production was up 3.7%, or 8.4% when pharmaceuticals were excluded, but revenue fell by 0.6% compared with the same period last year.
Still, the industry maintained its annual guidance for production volumes including pharmaceuticals to grow by 3.5% and industrial sales by 1.5%.