Automotive sentiment rebounds after July trough in confidence – August CMCI

LONDON (ICIS)–Sentiment in the chemical sector of the European automotive industry improved in August with optimism increasing in most near-term and 12-month forecasts on the back of encouraging trends in the UK, according ICIS CMCI data on Tuesday.

The majority of indicators were stable or higher, with reported and expected profitability seeing the largest increase after hitting a low in July. Order book volumes were seen as stable compared to July, but the 12-month prediction rose compared to the previous assessment.

The exception was the forecast for business conditions which fell slightly when compared to July. However, this was only a minor change compared with a more than 10-point increase in short-term business conditions.

In part, the positive trends in the CMCI index reflect a rebound in sentiment following a deep trough in July, when the majority of indicators fell compared to the previous month.

Market sentiment in July was strongly affected by the UK’s vote to exit the European Union late in June, which was widely expected to have negative consequences for the UK economy in terms of a reduction in investment and spending.

This was expected to translate to lower car and other vehicle sales which are strongly correlated to GDP and overall economic growth and spending.

However, the UK government has recently released encouraging economic statistics for July, showing an increase in consumer spending, employment and modest inflation.

This may be responsible for a turnaround of opinion in August and reflected in a more positive short-term trend in the overall August CMCI.

In addition, short-term automotive and economic trends in the Chinese and US economies were positive in July, with passenger car sales rising strongly in the former and high wage growth registered in the latter – although European automotive sales were down in Germany.

Global figures in July for overall vehicle registrations and passenger vehicle registrations also showed a significant year on year rise, which is likely to have contributed to the rosier outlook of market participants.

The newly established ICIS Europe CMCI aggregates sentiment from hundreds of petrochemical market players actively involved in price negotiations across more than 60 different markets.

The Europe CMCI runs from +100, to -100, with zero on each index representing neutral, or uncertain conditions, a negative score indicating bearish expectations and a positive score representing bullish expectations. The indices also gather sentiment on the comparison between the current situation and the situation across the past 12 months to give a complete picture of current market conditions and confidence. The information is gathered in the third week of each month.  A full methodology is available on request.

For more details on the overall Europe CMCI data, click here

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