FRANKFURT AM MAIN (AFP) – Weaker manufacturing output in Germany and worldwide weighed on German chemical firms in the first quarter, the VCI industry federation said yesterday, confirming expectations for worsening performance in 2019.

German chemical and pharmaceutical makers reported production down 6.0 per cent year-on-year and revenues down 3.8 per cent between January and March, at EUR48.3 billion (USD54.1 billion), the VCI said.

Revenues were also lower than in the fourth quarter of 2018 – when the German economy narrowly avoided a technical recession, or two successive quarters of negative growth.

Falling prices counteracted a quarter-on-quarter increase in production, the VCI said.

“In Germany, demand for chemicals was weak as client industries throttled production” in the first quarter, the federation found. “Abroad, there was a similar picture in the sector, since global industry was marking time.”

Chemicals are Germany’s third-largest industrial sector, employing 462,500 people.

Many member companies’ products are inputs for other industries, making chemicals firms sensitive to changing conditions in manufacturing.

GDP growth data released earlier yesterday showed the German economy returned to growth in the first quarter, adding 0.4 per cent to gross domestic product.

But construction and consumer spending accounted for much of the rebound, while industry continued to suffer from global trade tensions.

Looking ahead to the full year, the VCI expects chemical production to fall 3.5 per cent compared with 2018, while slightly higher prices limit the drop in revenue to 2.5 per cent, down to around EUR198 billion.