European Foundry Industry Sentiment

Decem­ber 2024: 

European Foundry Industry Sen­ti­ment Indic­ator, Decem­ber 2024: Weak demand and high costs drive sen­ti­ment down

In Decem­ber 2024, the European Foundry Industry Sen­ti­ment Indic­ator (FISI) declined slightly, reach­ing 89.0 index points com­pared to 89.6 in Novem­ber. This marks a con­tinu­ation of the chal­len­ging envir­on­ment faced by the European foundry industry, as the sen­ti­ment remains sig­ni­fic­antly below the neut­ral 100-point threshold. The decrease reflects per­sist­ent uncer­tain­ties in the broader eco­nomic and indus­trial landscape.

The ongo­ing con­trac­tion in the man­u­fac­tur­ing sec­tor has been a key factor influ­en­cing the FISI. Recent data indic­ate a sharp down­turn in indus­trial pro­duc­tion across Europe, with Ger­man indus­trial orders fall­ing not­ably. Weak demand from key down­stream indus­tries, such as auto­mot­ive and machinery, con­tin­ues to weigh heav­ily on foundries. Moreover, ongo­ing geo­pol­it­ical uncer­tain­ties, par­tic­u­larly con­cern­ing global trade, have exacer­bated the dif­fi­cult oper­at­ing con­di­tions. For instance, the pos­sib­il­ity of increased trade ten­sions has raised con­cerns over sup­ply chain dis­rup­tions and cost pres­sures. Another sig­ni­fic­ant factor impact­ing sen­ti­ment is the slug­gish recov­ery in energy-intens­ive sec­tors. Foundries, heav­ily reli­ant on stable and afford­able energy sup­plies, have struggled with elev­ated energy costs through­out the year. Although there has been some sta­bil­iz­a­tion in recent months, energy price volat­il­ity remains a con­cern, deter­ring invest­ment and dampen­ing confidence.

Look­ing back to 2024, the FISI began the year at 96.2 index points, reflect­ing cau­tious optim­ism within the industry. How­ever, as eco­nomic head­winds intens­i­fied, the indic­ator stead­ily declined and remained below 100 points through­out the year. By the fourth quarter, sen­ti­ment had fallen to its low­est level, with Decem­ber’s score of 89.0 under­lin­ing the cumu­lat­ive impact of high costs, bur­eau­cracy, weak demand and geo­pol­it­ical instabil­ity. This down­ward tra­ject­ory high­lights the sig­ni­fic­ant chal­lenges the sec­tor has faced in adapt­ing to an evolving eco­nomic landscape.

Des­pite these chal­lenges, there is cau­tious hope that struc­tural adjust­ments and policy meas­ures could provide some relief by 2025. For now, the European foundry industry con­tin­ues to nav­ig­ate a com­plex mix of pres­sures, with resi­li­ence and adapt­ab­il­ity remain­ing key to recovery.

In Decem­ber 2024, the Busi­ness Cli­mate Indic­ator (BCI) exper­i­enced a decline, mov­ing from ‑0.77 in Novem­ber to ‑0.91. This down­turn reflects heightened pess­im­ism among European busi­nesses, par­tic­u­larly in Ger­many, where the ifo Busi­ness Cli­mate Index fell to 84.7 points, mark­ing its low­est level since May 2020.

Sev­eral factors con­trib­uted to this decline. The man­u­fac­tur­ing sec­tor faced sig­ni­fic­ant chal­lenges, with com­pan­ies report­ing dis­sat­is­fac­tion with cur­rent busi­ness con­di­tions and express­ing increas­ingly gloomy expect­a­tions. The situ­ation regard­ing busi­ness orders worsened, lead­ing to announced pro­duc­tion cut­backs. These devel­op­ments under­score the per­sist­ent chal­lenges within the European busi­ness envir­on­ment, as firms nav­ig­ate ongo­ing eco­nomic uncer­tain­ties and sec­tor-spe­cific difficulties.

The FISI – European Foundry Industry Sen­ti­ment Indic­ator – is the earli­est avail­able com­pos­ite indic­ator provid­ing inform­a­tion on the European foundry industry per­form­ance. It is pub­lished by CAEF the European Foundry Asso­ci­ation every month and is based on sur­vey responses of the European foundry industry. The CAEF mem­bers are asked to give their assess­ment of the cur­rent busi­ness situ­ation in the foundry sec­tor and their expect­a­tions for the next six months.

The BCI – Busi­ness Cli­mate Indic­ator – is an indic­ator pub­lished by the European Com­mis­sion. The BCI eval­u­ates devel­op­ment con­di­tions of the man­u­fac­tur­ing sec­tor in the euro area every month and uses five bal­ances of opin­ion from industry sur­vey: pro­duc­tion trends, order books, export order books, stocks and pro­duc­tion expectations.

EFF Con­tact:

Johannes Kappes
Sec­ret­ary Com­mis­sion for Eco­nom­ics & Stat­ist­ics
phone: +49 211 68 71 — 291
mail: secretarygeneral@eff-eu.org