The mood among German companies in the manufacturing sector fell to its lowest level in over three years in February, while confidence within the plastics industry continued to wane, according to the latest survey from the Munich-based think tank ifo (www.ifo.de)

While ifo’s headline business climate index for all sectors in Germany rose three-tenths to 85.5 points, matching market expectations, the assessment of the situation among manufacturers skidded to its lowest level since September 2020, when the world was in the throes of the pandemic.

Ifo said manufacturers of rubber and plastic goods were also unable to escape the downward trend. Managers’ expectations regarding the development of their business situation deteriorated significantly, with the decline in the order backlog continuing unabated and little improvement anticipated. On the contrary: numerous companies have already announced further production cuts. Management’s assessment of the current situation also fell sharply.

Accordingly, the business climate index for German plastics and rubber products also dropped, ifo reported.

The weak data for manufacturing and the plastics and rubber sector followed a surprise decline in S&P Global’s purchasing managers’ index (PMI) for German manufacturing, which moved further into contraction territory despite expectations among analysts of a rise.

Eurozone manufacturers also expressed more gloom, according to S&P Global, with the PMI for the currency area slipping in February.

While the production industry bites its nails, service firms in the Eurozone reported the most optimism in seven months, with the index for the sector improving to 50 points, a number representing sideways movement and outside of the contraction zone. 

Managers in Germany’s service sector also responded to this month’s S&P Global poll with less pessimism, which pushed the measure for such businesses to a two-month high of 48.2 points, a mark still within contraction territory.