At the beginning of spring, the mood in most of the German timber industry has deteriorated significantly.

According to the economic indicator determined by the Munich-based Ifo Institute (IFO Institute) and the Association of the German Timber Industry (HDH), the situation has worsened significantly against a backdrop of cautious forecasts. In March, German companies assessed their current business situation slightly more positively than in the previous month. However, looking ahead to the coming months, pessimism increased significantly. High raw material prices, lower purchasing power and rising construction interest rates are hampering the sector's economy.

Overall, the HDH economic indicator fell to -16.6 points in March 2023 (compared to -11.9 points in the previous month). The decisive factor was a weaker assessment of the outlook for the next six months, the value of which fell by 8.5 points to -40.7 points (compared to -32.2 points in the previous month).

Given the varying impacts on individual segments, the mood in the German timber industry remained mixed. Companies operating in the construction-related timber sector (+34.3 points), the wood-based materials industry (+25.8 points) and the prefabricated timber construction industry (+15.7 points) rated their current business situation positively. However, expectations in all segments pointed to negative developments in the coming months.

The wood packaging manufacturing sector (-64.9 points), prefabricated timber construction (-57.1 points) and the sawn timber sector (-56 points) have been looking towards the future with particular concern recently: in these segments, the business situation is expected to deteriorate significantly over the next six months.

The German timber industry saw a significant decline in sales at the start of the year. In the timber industry, sales in January 2023 fell by 12.6% compared to the same month of the previous year. Compared to January 2022, a 7.8% drop was recorded in the production of wood-based materials, of which 10.4% was a negative indicator in foreign transactions and 7.8% was a decline in domestic sales. The German Federal Statistical Office recorded an opposite trend in the wood-related construction sector. Here, sales abroad fell by 38%, but on the other hand, domestic sales increased by 11%. Overall, compared to January 2022, sales increased by 4.2%.