INDUSTRIAL POLICY DOSSIER
Industry Report
November 2017
Three-percent rise in German manufacturing output expected in 2017. German industry is a leading force in Europe’s economic recovery. Export-focused manufacturing is benefiting from increasingly buoyant global trade.
Industrial production in the European Union (EU28) is still pointing up for the fourth consecutive year. Production is set to grow by three percent – the highest growth in the last six years.
Global industrial production is set to grow by over three percent year on year in 2017 – the strongest growth since 2014. Advanced economies are also likely to record accelerated growth rates in 2017.
Global trade is expected to increase by four percent over last year – the strongest growth since 2011. Based on BDI member association estimates, we expect German exports to show similarly vigorous growth.
Industry Report 23/11/2017
Content Global industrial production ............................................................................................................................... 3 Continuous increase in production since spring .................................................................................................... 3 Industrial production in the advanced economies .................................................................................................. 4 Industrial production in the emerging economies .................................................................................................. 5 United Staates ....................................................................................................................................................... 6 China ..................................................................................................................................................................... 7 Japan ..................................................................................................................................................................... 8 South Korea ........................................................................................................................................................... 9 European Union ................................................................................................................................................... 10 Industrial production across the EU ..................................................................................................................... 11 Germany .............................................................................................................................................................. 12 France ................................................................................................................................................................. 13 Italy ...................................................................................................................................................................... 14 Spain ................................................................................................................................................................... 15 United Kingdom ................................................................................................................................................... 16 Foreign trade ....................................................................................................................................................... 17 Industrial sectors in Germany .......................................................................................................................... 20 Production in the German aluminium industry largely positive ............................................................................ 20 Plant engineering and industrial services ............................................................................................................ 20 Automotive industry ............................................................................................................................................. 21 Dynamic growth continues in the building materials industry ............................................................................... 22 Construction industry ........................................................................................................................................... 23 2017 a good year for the German chemical industry ........................................................................................... 24 German electrical and electronics industry heading for record revenue .............................................................. 25 Brighter prospects for foundry industry ................................................................................................................ 25 Ceramics industry ................................................................................................................................................ 26 2017 the first year of upturn for machinery production......................................................................................... 27 Nonferrous metal industry.................................................................................................................................... 28 Shape of the steel industry in summer 2017 ........................................................................................................ 28 Steel and metal processing ................................................................................................................................. 29 Current state of business for the German textile and clothing industry ................................................................ 30 Imprint ................................................................................................................................................................ 31
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Industry Report 23/11/2017
Global industrial production Continuous increase in production since spring Growth in global industrial production has topped three percent for the first time since 2014. According to figures from the CPB Netherlands Bureau for Economic Policy Analysis, industrial production in the first eight months was up by 2.7 percent over the same period last year. Beginning in early 2016, the upswing has clearly continued to gather strength this year. Since March 2017, year on year global industrial production has grown by over three percent every month. The current trend in the worldwide purchasing managers' index indicates that growth will continue to speed up in the last quarter of the year. The index has risen steadily from August to October 2017, climbing to a new record high every month. This November is the highest since November 2013. If the current level of production is maintained, this year will see production grow by an overall three percent. In the last two years, growth momentum emanated almost exclusively from advanced economies. This year’s impulses by contrast were more broadly based across different regions. Industrial production in the emerging economies increased 3.2 percent in the first eight months of the current year, still outpacing the advanced economies, which nonetheless managed to step up production by just over two percent for the first time since 2013.
World: Industrial production*, Purchasing Managers Index** Emerging economies Advanced economies Purchasing Managers Index seasonally adjusted (right axis) 5
55 54
4 53 3 52 2
51 50
1 49 0 48 -1
47 2013
2014
2015
2016
2017
*Production index: two-month average, after calendar and seasonal adjustments, in percent, year on year **from January 2014 Sources: Macrobond, Netherlands Bureau for Economic Policy Analysis (CPB), own calculations
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Industry Report 23/11/2017
Industrial production in the advanced economies Broad-based upturn Following a two-year period of almost zero growth, industrial production in the advanced economies is experiencing a robust recovery. Turning upward at the turn of the year 2016/2017, growth has steadily gathered momentum. Production in the first eight months of the year compared to the same period last year was up by 2.1 percent. While the United States and Japan were still battling with a decline in industrial output in the last two years, pulling down the overall result, the current upswing has a broader base. Industry in the euro area managed to maintain the previous year’s level of growth, with the US industry keeping pace, the Japanese industry taking the lead by growing twice as fast, and the other advanced economies picking up speed as well. The latest figures point towards continued robust growth. Since May 2017, industrial production in the advanced economies has increased by more than three percent over the same period last year (two-month average, after seasonal adjustment). In August, the purchasing managers' index for the advanced economies climbed to its highest level this year since January, and topped that again in October. If the current level of production is maintained for the rest of the year, industrial production in the advanced economies will grow by 2.4 percent in 2017 overall – the strongest growth recorded in the last seven years.
Advanced economies: Industrial production*, Purchasing Managers Index** other Advanced economies Euro area Japan USA Purchasing Managers Index seasonally adjusted (right axis)
4
3
56
55
2 54 1 53 0 52 -1 51
-2
-3
50 2013
2014
2015
2016
2017
*Production index: two-month average, after calendar and seasonal adjustments, in percent, year on year **from January 2014 Sources: Macrobond, Netherlands Bureau for Economic Policy Analysis (CPB)
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Industry Report 23/11/2017
Industrial production in the emerging economies Expansion down to moderate, but better regional balance Industrial production in the emerging economies is unlikely to match the pace recorded last year. A major factor here is certainly the slowdown in the emerging economies in Asia, where the increase in production lost steam in the course of the year. Industrial production in Africa and the Middle East was not as lively in the first eight months of 2017 as in the same period last year. The situation has improved markedly in the Central and Eastern European countries, however, with industrial production increasing for the sixth quarter in a row. Good news also from South America, which appears to be emerging from its recession, boosting expectations of a turnaround in industrial production, which has dropped constantly since 2014. Production is expected to have increased over the previous year in the third quarter of 2017. Overall industrial production in the emerging economies increased by 3.2 percent in the first eight months of the year over the same period last year. While the increase in production is not quite as dynamic as it has been in the past, it does show a better balance across the different regions. We do not expect a further acceleration of growth in the remaining four months of the year. The purchasing managers' index in the emerging economies was higher than in the summer months but did not reach the level of August 2017 – this year’s record so far. If the level of production is maintained throughout the rest of the year, industrial production in the emerging economies will increase by 3.5 percent in 2017, matching the level of 2016.
Emerging economies: Industrial production*, Purchasing Managers Index** Africa/Middle East Latin America Central and Eastern Europe Asia
6
54
Purchasing Managers Index seasonally adjusted (right axis) 5 53 4 52 3 2
51
1 50 0 49 -1 -2
48 2013
2014
2015
2016
2017
*Production index: two-month average, after calendar and seasonal adjustments, in percent, year on year **from January 2014 Sources: Macrobond, Netherlands Bureau for Economic Policy Analysis (CPB)
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Industry Report 23/11/2017
United Staates Not "great again" but in better shape The US industry may not be "great again" yet, but it has managed to gather strength again after a weak two years. Manufacturing output already showed a slight increase in the fourth quarter of 2016, a positive development which spread to industrial production in the first quarter of 2017 (including energy and mining). Output increased in both manufacturing and industrial production in each of the first three quarters compared to the same quarter last year. Among the individual industries in the manufacturing sector, machinery production played a dominant role, steadily expanding output from the fourth quarter 2016. Emerging from a two-year slack, low starting levels contributed to its strong performance. The food industry, which has expanded for the last three years, also delivered an above average performance. Following a shaky start to the year, the electrical and electronics industry also performed well, managing to increase production in the second and third quarter. The chemical industry recorded strong growth last year, making the overall performance of the pharmaceutical industry appear relatively weak according to the latest figures. The good results for basic chemicals production should not obscure the fact that production here has dropped in the last three years. Output in vehicle manufacturing is expected to be slightly lower than last year, but after seven years of continuous expansion this is no cause for concern.
United Staates: Industrial production*, Purchasing Managers Index** 5
60
4 57 3 2
54
1 51 0 -1
48
-2 45 -3 -4
42 2013
2014
Industrial production (left axis)
2015
2016
2017
Purchasing Managers Index, seasonally adjusted (right axis)
*Production index: two-month average, after calendar and seasonal adjustments, in percent, year on year **from January 2014 Source: Macrobond
6
Industry Report 23/11/2017
The rate of expansion has dropped slightly according to the latest figures. In a two-month comparison, industrial production dipped slightly in August/September 2017 (after seasonal and calendar adjustment) compared to the previous two months. However, in a year on year comparison, production is decidedly up. The purchasing managers' index for industry most recently pointed towards an increase in production. Following a minor increase in September, it climbed 1.5 index points in October to reach 54.6 – only just below the January level, the highest recorded this year so far. Even if production in the fourth quarter only draws even with the third, industrial production in the US will have increased by one percent in 2017. We estimate a slightly higher increase in production of 1.5 percent. China The value added of Chinese industry (figures only available for industry including construction) initially increased by 6.3 percent in January 2017, before going up 6.5 percent in the next two months year on year. The pace of growth nudged up again in spring, reaching a rate of 6.6 percent in comparison to the same period last year. Growth momentum slowed slightly at the beginning of the second half of the year, but remained at just under six percent. The purchasing managers' index for Chinese industry gained two index points from May to August, and is still pointing towards expanding production. The interim high recorded in August was not sustained however, with a slight downward correction following in September. After growing at just under six percent last year, industrial production in China this year is likely to grow by slightly over six percent.
China: Industrial production*, Purchasing Managers Index** 9
52
8 51
7 6
50 5 4 49 3 2
48
1 0
47 2013
2014
Industrial production (left axis)
2015
2016
2017
Purchasing Managers Index, seasonally adjusted (right axis)
*Production index: two-month average, after calendar and seasonal adjustments, in percent, year on year **from January 2014 Source: Macrobond
7
Industry Report 23/11/2017
Japan Industry close to a ten-year high After two years of declining production levels, Japanese industry is expected to increase output again in 2017, and seems likely to top a ten-year record. Industrial production has increased markedly since the end of last year. Judging by the 3.7 and 5.5 percent growth rates registered in the first two quarters of the year respectively, industrial production excluding construction is likely to put in a good performance for the year as a whole. Manufacturing did even better. Among the individual manufacturing industries, vehicle production is likely to deliver the strongest performance, up by slightly more than six percent, despite the substantial increase in output in the second half of 2016 already. Japan's machinery manufacturers recorded growth rates in the high single digit range in each of the first three quarters of the year and are expecting their performance to equal that of vehicle production. The chemical industry is also heading for above average growth, with production of basic chemicals likely to slightly outpace pharmaceuticals in the year as a whole. Production in the electrical and electronics industry, however, seems likely to come in considerably below last year's result. The latest figures show a continued increase in production. The two-month comparison July/August 2017 registers a five percent increase in industrial production year on year following seasonal and calendar adjustment, following a plus of 5.1 percent. As in the last thirteen months, the purchasing managers' index in October 2017 still points towards expanding production, though not as high as the record month of the year so far, February 2017. If production in the fourth quarter matches that of the third, industrial production in Japan will have increased by slightly more than four percent in 2017 overall – the strongest growth the country has registered since 2010.
Japan: Industrial production*, Purchasing Managers Index** 10
60
8 57 6 4
54
2 51 0 -2
48
-4 45 -6 -8
42 2013
2014
Industrial production (left axis)
2015
2016
2017
Purchasing Managers Index, seasonally adjusted (right axis)
*Production index: two-month average, after calendar and seasonal adjustments, in percent, year on year **from January 2014 Source: Macrobond
8
Industry Report 23/11/2017
South Korea Industry continues to expand South Korea's industrial production looks set to expand for the second consecutive year in 2017. Following a strong first quarter with production increasing by four percent, the second quarter did not quite equal the previous year's level. Production grew again in the third quarter, bringing the overall result for the first three quarters of the year to a plus of 1.7 percent. Among the individual industries, basic chemicals registered the strongest growth, up 5.7 percent in the first nine months of the year. Including pharmaceuticals, which – as was the case in Japan – contributed negatively to growth, the chemical industry still shows 3.3 percent growth for this period. South Korea's machinery manufacturers registered a clear pickup in business, welcome relief from four years of recession. In the first nine months of the year, production in this sector increased by 2.8 percent. Vehicle production, on the other hand, is heading for a below-average performance this year. Production in the electrical and electronics industry is down once again, with output by September still lower than last year. The latest figures show that production will continue to increase. In the two-month comparison August/September 2017, industrial production increased by 2.3 percent after seasonal and calendar adjustment following 1.3 percent growth in the previous period. After a two-month slouch, the purchasing managers' index was back to expansion and climbed to the highest level seen so far this year. If production in the fourth quarter maintains the growth rate shown in the third, industrial production in South Korea will grow by around 1.5 percent this year, a level the country has not experienced since 2012.
South Korea: Industrial production*, Purchasing Managers Index** 6
52
5
51
4 50 3 2
49
1
48
0 47 -1 46
-2 -3
45 2013
2014
Industrial production (left axis)
2015
2016
2017
Purchasing Managers Index, seasonally adjusted (right axis)
*Production index: two-month average, after calendar and seasonal adjustments, in percent, year on year **from January 2014 Source: Macrobond
9
Industry Report 23/11/2017
European Union Production increases for the fourth consecutive year Industrial production in the European Union (EU28) is set to expand for the fourth consecutive year and could even be the strongest in the past six years. Following a production increase of two percent in the first quarter of 2017 and 2.8 percent in the second, growth has continued to accelerate in the third. In the first eight months of the year, production increased by 2.7 percent over the previous year. Manufacturing is looking even better. Among the individual manufacturing industries, top performers are likely to be vehicle production and the electrical and electronics industry – both with growth rates of over four percent. Machinery manufacturing is not far behind, heading for an annual growth of just under four percent. Basic chemicals production is anticipated to grow by around three percent this year. The slightly lower results in pharmaceuticals will pull overall growth in the chemical industry down to a below-average performance of around two percent. The latest figures indicate that the speed of growth will pick up considerably towards the end of the year. In the two-month comparison of July/August 2017 compared to the previous year, industrial production in the EU28 was up by 3.6 percent after seasonal and calendar adjustment, following a plus of 3.2 percent the previous month. The purchasing managers' index for industry reached the highest levels this year in both the last two months. We expect the results for production growth in the fourth quarter to equal those for the third, bringing the annual increase in industrial production in the EU in 2017 to around three percent over last year.
European Union: Industrial production*, Purchasing Managers Index** 4 58 3 56 2 54 1 52 0
50
-1
48
-2
46
-3
44
-4
42 2013
2014
Industrial production (left axis)
2015
2016
2017
Purchasing Managers Index, seasonally adjusted (right axis)
*Production index: two-month average, after calendar and seasonal adjustments, in percent, year on year **from January 2014 Sources: Macrobond, Eurostat
10
Industry Report 23/11/2017
Industrial production across the EU Strong recovery in Italy; United Kingdom not lost yet The economic upturn in European industry has spread to almost all major economies in the European Union. Among the big five, Italy's manufacturing sector is likely to register the strongest growth this year in comparison to last year, outperforming Germany, which takes second place, as it did the year before. Although Italy has increased production sharply in the last two years, it is still ten percent below the output volume of 2008. German industry, on the other hand, is now producing seven percent more than it did ten years ago. Manufacturing in France should increase by 2.3 percent in 2017 – the strongest growth the country has experienced in the last six years, although still seven percent below pre-crisis levels. In the United Kingdom, industrial production is set to increase by slightly over two percent in 2017, exceeding the level reached in 2008 levels for the first time. Spain's industry will round off the year at a slightly slower pace than in the robust last two years, although production figures are still up by around 2.5 percent.
Development of the Industrial production* since 2013
110 Spain 108 Germany 106
Italy United Kingdom
104
France 102
100
98 2013
2014
2015
2016
2017
*Production index: six-month average, after calendar and seasonal adjustments (2013=100) Source: Macrobond
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Industry Report 23/11/2017
Germany Germany will see industrial production (industrial sector without construction) increase for the fifth year in a row, with growth expected to top two percent. Following a weak start, production increased by a sturdy three percent year on year in the second quarter. Similar growth is expected for the third quarter. Based on the available data, production in the first eight months of the year was up by 2.5 percent compared to the same period last year. Manufacturing output increased slightly more in the same period. Among the individual, the electrical and electronics industry recorded the biggest rise with five percent. After four years of lateral movement, the figures for machinery manufacturing are pointing up again with an increase of somewhat over two percent. Thanks to the strong pharmaceuticals, the chemical industry is likely to improve on the results for 2016 by slightly over two percent. Vehicle production will likely register similar growth. The high pace of growth is expected to continue to the end of the year. In the two-month comparison July/August 2017, industrial production increased by 4.3 percent over the same period last year following seasonal and calendar adjustment. Growth in the two previous months was also over three percent. The purchasing managers' index for industry climbed to 60.6 points in September and October – the highest in the past six years. Even if production stagnates in the fourth quarter, year on year growth will be over two percent. On the basis of this year’s figures so far and current sentiment indicators, we expect an annual increase in production of around three percent in 2017.
Germany: Industrial production*, Purchasing Managers Index** 5 60 4 58 3 56 2
54
1
52
0
50
-1
48
-2
46
-3
44 2013
2014
Industrial production (left axis)
2015
2016
2017
Purchasing Managers Index, seasonally adjusted (right axis)
*Production index: two-month average, after calendar and seasonal adjustments, in percent, year on year **from January 2014 Sources: Macrobond, Eurostat
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Industry Report 23/11/2017
France In France, industrial production (industrial sector without construction) expanded considerably this year. After five years of contraction and stagnation, production looks likely to increase between 1.5 and two percent in 2017. Following a weak first quarter in which production increased by a slender 0.6 percent, growth was up to 1.6 percent in the second quarter and picked up even more in the third. In the first eight months of the current year, production increased by 1.5 percent compared to the same period last year. Manufacturing output recorded an increase of 1.8 percent in this period. The chemical industry was the major driver, increasing production by just over five percent. The slightly weaker pharmaceuticals hardly affected the overall result for the chemical industry. Vehicle production and the electrical and electronics industry recorded growth of over three percent. Machinery manufacturing, on the other hand, delivered a below average performance, with an increase of only one percent. Production is expected to accelerate again in the final months of the year. The two-month comparison July/August 2017 shows an increase in industrial production of 2.5 percent year on year following seasonal and calendar adjustment. Growth in the two months before, at 2.6 percent and 3.1 percent respectively, also clearly outstripped the rates seen earlier this year. The purchasing managers' index for industry has pointed up since October 2016, rising steadily in the last five months. Three of these months saw record highs for the year. Even if production stagnates in the fourth quarter, annual production growth will attain 1.8 percent. In view of the positive trend seen in the last few months, we expect a stronger growth in production of 2.25 percent.
France: Industrial production*, Purchasing Managers Index** 5 56
4 3
54
2 52 1 50
0 -1
48
-2 46 -3 -4
44 2013
2014
Industrial production (left axis)
2015
2016
2017
Purchasing Managers Index, seasonally adjusted (right axis)
*Production index: two-month average, after calendar and seasonal adjustments, in percent, year on year **from January 2014 Sources: Macrobond, Eurostat
13
Industry Report 23/11/2017
Italy 2017 is the third year in which Italy’s industrial production registers greater growth than the previous year. A production increase (industrial sector excluding construction) of 1.9 percent in the first quarter year on year, was followed by a 3.4 percent increase in the second quarter of 2017. This trend is set to continue for the rest of the year. In the first eight months of 2017, production increased by 3.1 percent compared to the same period last year. Output in the manufacturing sector experienced similar growth. Vehicle production recorded above average growth rates for the third consecutive year. Achieving seven percent growth last year, vehicle production increased by 6.8 percent as of August 2017. On the back of the strong pharmaceuticals, the chemical industry recorded an increase of 5.6 percent. But even discounting pharmaceuticals, the Italian chemical industry managed a solid increase of 2.6 percent. Machinery manufacturing has lost a little of last year’s momentum but should still manage around two percent growth. The electrical and electronics industry is the only sector that has not benefited from the general upturn. Following a year of stagnation in 2016, production in this industry is anticipated to drop by another two percent in 2017. Growth looks set to accelerate further in the last four months of the year. In the two-month comparison July/August 2017, industrial production increased by 1.4 percent over the same period last year following seasonal and calendar adjustment. In the previous two months, average growth was slightly higher. The purchasing managers' index for industry has shown an increase in production since October 2016. Increasing steadily in the last five months, it hit record highs for the year three times. Even if production turns out to stagnate in the last quarter of the year, the annual increase in production will amount to three percent. In view of the positive sentiment indicators, we expect growth to total 3.5 percent.
Italy: Industrial production*, Purchasing Managers Index** 6
58 56
4 54 2 52 0
50 48
-2 46 -4 44 -6
42 2013
2014
2015
2016
2017
Industrial production (left axis) Purchasing Managers Index, seasonally adjusted (right axis) *Production index: two-month average, after calendar and seasonal adjustments, in percent, year on year **from January 2014 Sources: Macrobond, Eurostat
14
Industry Report 23/11/2017
Spain Spanish industry is enjoying a fourth year of economic recovery. In the first quarter of the current year, industrial production (industrial sector excluding construction) increased by two percent. In the following quarter, the increase was already 2.2 percent over the second quarter of 2016. The pace of growth is likely to be similar in the third quarter. In the first eight months of the year, production increased by 2.1 percent. Among the key industries of the manufacturing sector, machinery manufacturing recorded the strongest growth for the first time in six years, increasing by five percent. The chemical and pharmaceutical industry and the electrical and electronics industry both managed to increase production by slightly over three percent in the first eight months of the year. Vehicle production dropped by just over three percent – not much of a drama considering that the industry has increased output by more than 38 percent in the last four years. The latest figures still point towards growth but at a slightly lower momentum. In the two-month comparison July/August 2017, industrial production was up 2.2 percent on the same period last year after seasonal and calendar adjustment, following an increase of 2.7 percent. The purchasing managers' index for Spain's industry points to a substantial increase in production for the end of the year. The index rose by 0.9 points in September and 1.5 in October – the highest in 29 months. If production levels achieved in the third quarter hold steady in the fourth, Spain's industrial production will grow by just under two percent in 2017 year on year. In view of the positive sentiment indicators and the upward trend in production levels so far, we expect an increase of 2.5 percent this year.
15
Industry Report 23/11/2017
Spain: Industrial production*, Purchasing Managers Index**
6
58
5
56
4 54
3 2
52
1 0
50
-1
48
-2 46
-3 -4
44
-5 42
-6 -7
40 2013
2014
Industrial production (left axis)
2015
2016
2017
Purchasing Managers Index, seasonally adjusted (right axis)
*Production index: two-month average, after calendar and seasonal adjustments, in percent, year on year **from January 2014 Sources: Macrobond, Eurostat
United Kingdom British industry has continued to grow for the fourth consecutive year. In the first quarter of the year, industrial production (excluding construction) registered its biggest quarterly increase in almost seven years, going up 2.6 percent. The level of production remained steady in the second quarter, followed by a slight increase in the third. Production increased by 1.4 percent year on year in the first eight months of 2017, while manufacturing output increased by two percent. Among the key manufacturing industries, vehicle production – the top performer of the past three years – dropped to second place behind machinery manufacturing, which displayed the highest growth rates seen in the manufacturing industry since 2010. Following two years of decreasing production levels, the electrical and electronics industry is back on a positive footing. The chemical industry, which stagnated last year, registered growth again, mainly due to basic chemicals production. Vehicle production increased by a slight 1.8 percent as of August 2017, but this industry has shown robust growth for almost seven years now. The latest figures show an increase in production in all major industrial sectors. In the two-month comparison July/August 2017, industrial production increased by 1.4 percent over the same period last year after seasonal and calendar adjustment, following an increase of one percent the previous month. The figures for manufacturing are slightly better still. The purchasing managers' index for industry has pointed to an increase in production for over a year. The growth rates recorded in the last three months are all substantially above the annual average. So far, the UK’s decision to leave the EU has not tangibly damaged the economic development of its industry. If the level of production in the fourth quarter equals that of the third, industrial production will increase by slightly more than one percent, a rate comparable to the previous year. In view of the positive trend in production across the board, we expect the annual result to be slightly higher than in 2016.
16
Industry Report 23/11/2017
United Kingdom: Industrial production*, Purchasing Managers Index** 5
63
4 58
3 2
53 1 0 48 -1 -2
43
-3 -4
38 2013
2014
2015
2016
2017
Industrial production (left axis) Purchasing Managers Index, seasonally adjusted (right axis) *Production index: two-month average, after calendar and seasonal adjustments, in percent, year on year **from January 2014 Sources: Macrobond, Eurostat
Foreign trade Global trading activities increase as strongly as they last did in 2011 Global trade has picked up substantially since the turn of the year 2016/2017. According to figures of the Netherlands Bureau for Economic Policy Analysis (CPB), global trading activities in the first eight months of the year 2017 increased by 4.4 percent compared to the same period last year. The upturn that began in late 2016 with an increase of more than two percent accelerated nicely in the first quarter of 2017. Global trade almost doubled that increase, going up by four percent. In the second quarter, trading activities increased by 4.3 percent year on year. Even if global trade stagnates in the last months of 2017, trade growth in the course of the year so far would total a year on year increase of four percent – the strongest growth since 2011. The advanced economies exported 3.6 percent more in the first eight months of the current year compared to the same period last year. Japan recorded the greatest growth in exports – an increase of seven percent. US exports also increased by slightly over four percent following a weak two-year period. Exports from the euro area were up 2.8 percent, and those from the remaining advanced economies were up by 3.9 percent. In the same period, advanced economies exported just under five percent more than last year. Among the individual regions, the Central and Eastern European economies led the way, with exports increasing by just under ten percent. Exports from newly industrialised Asian economies also saw a robust increase of 5.8 percent. Exports from South America rose 3.4 percent, while exports from Africa and the Middle East dropped by one percent.
17
Industry Report 23/11/2017
World: Exports according to region of origin 6
Advanced economies Emerging economies
5
4
3
2
1
0
-1 2013
2014
2015
2016
2017
index: two-month average, after calendar and seasonal adjustments, in percent, year on year Sources: Macrobond, Netherlands Bureau for Economic Policy Analysis
18
Industry Report 23/11/2017
Development of German exports The export activity of German enterprises increased considerably at the turn of 2016/2017, rising 5.6 percent in a year on year comparison. In the first quarter of 2017, exports to Asia increased with particular vigour, surging by 9.3 percent. Trade with the United States also firmed up in the first quarter following a weak last year. In the second and third quarter, trade with European Union member states also picked up substantially. Within the European Union, exports to countries outside the euro area provided the strongest momentum for German exports until the middle of last year, when exports to countries within the euro area took over. In the first nine months of the current year, total German exports increased by 6.3 percent over the same period last year. Exports to the euro area increased by 6.4 percent, topping the 4.4 percent increase in exports to EU countries outside the euro area. Exports to countries outside the European Union increased by 7.3 percent in the same period. Based on the estimates of BDI member associations, we expect an increase in exports of at least four percent for 2017 overall.
Germany: Exports according to region of destination remaining countries Asia USA
12
non Euro EU Euro area
10
8
6
4
2
0
-2
-4 2013
2014
2015
2016
2017
index: two-month average, after calendar and seasonal adjustments, in percent, year on year
Sources: Macrobond, Deutsche Bundesbank
19
Industry Report 23/11/2017
Industrial sectors in Germany Production in the German aluminium industry largely positive From January to September 2017 Germany produced around 987,600 tonnes of aluminium, three percent below the same period last year. Production in this industry is divided into recycled aluminium (59 percent) and primary aluminium (41 percent). While the production of primary aluminium only increased marginally, there was a clear increase in recycled aluminium. The production of semi-finished aluminium products (rolled goods, extruded products, conductors and wires) up to September was one percent below the same period last year at 1,882,800 tonnes. In the record year 2014, 1,948,000 tonnes were produced in that period. The industry supplies all major industrial sectors and the construction industry. Sales to the transport sector showed particularly strong growth. In terms of volume, aluminium rolling mills produce the most German semi-finished aluminium goods. The production of aluminium rolled products totalled 1,414,300 tonnes – a year on year drop of 1.9 percent. The producers of extruded products reported a production increase of 1.4 percent (451,700 tonnes) between January and September 2017. Aluminium processing companies in Germany produced a total of 264,000 tonnes in this period, corresponding to a decrease of 2.7 percent over the previous year. Products include foil, thin ribbon, tubes, aerosols and other cans as well as metal powder. All sectors experienced positive growth. The main buyer for aluminium processing is the packaging sector. The German aluminium industry has thus largely had a good year so far. Companies in this sector view the coming months with cautious optimism. Overall, the industry expects an increase in production for 2017. Slight rise in aluminium exports Between January and August 2017 exports were only a slim support for the German aluminium industry. Exports of the strongly export-oriented producers of semi-finished aluminium products increased by 1.1 percent overall. Exports to countries outside Europe recorded the strongest growth (particularly Africa and South and Central America). Exports to partners in the EU28 dropped by 1.7 percent. The most important European trading partner is the United Kingdom, which accounts for 20 percent. Exports to the UK dropped by just under one percent.
Contact: Dr. Andreas Postler / Phone: +49 211 4796 118 / Mail: andreas.postler@aluinfo.de
Plant engineering and industrial services Plant engineering and industrial services are closely connected. Industrial services contribute to value added in plant engineering and other sectors and draw on the expertise of these sectors. Conversely, in periods of insufficient replacement or new investment, plant engineers are increasingly entering the services sector. German plant manufacturers have been technology leaders on the market for energy and processing plants for decades. On account of the difficult market environment and increasing pressure from international competition, however, they are finding it increasingly difficult to maintain their competitive edge. The energy transition in Germany has made maintenance investments and new investments in the energy sector and energy-intensive industries largely unpredictable. Uncertainties in Europe due to Brexit, the situation in the Middle East and US foreign trade policy are braking investment decisions in key markets abroad. No turnaround is on the horizon yet, either at home or abroad.
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For the past ten years, the dominant trend on the global market has been flat demand, with a negative trend in key export sectors such as conventional energy plant engineering. Plant manufacturers in Germany are in global competition with manufacturers that take on technologically less sophisticated but lower-price projects. Global market shares in plant manufacturing have thus shifted away from German enterprises (2016: 15 percent compared to 2008: 20 percent). The result is that German plant manufacturers have come under much greater competitive pressure. The percentage of quotes won dropped by five percentage points in the past five years and is now at 25 percent. Demand is shifting to smaller, more flexible, modular plants. Lower batch sizes are additionally increasing pressure on costs. In these investment conditions, plant engineering centres on the optimisation of existing plants and measures to increase environmental protection. The focus is increasingly shifting to plant servicing. Services related to plant engineering and operation already account for 16 percent of total sales in plant manufacturing. Industrial service providers support industrial enterprises in a highly skilled and specialised partnership to meet the ever more stringent standards of quality and efficiency. Industrial services are expanding despite the conditions, growing 1.8 percent in 2016, primarily through individual acquisitions of midsized enterprises. The very moderate level of growth recorded by this sector since 2012 is due to the unfavourable investment environment. According to a current survey of the industry, 20 percent of service providers see the energy transition as a risk or even a high risk. Nonetheless, two thirds of service providers expect their sales to rise in Germany. Expectations are more cautious for foreign markets, with only around one half of service providers expecting sales to increase there. The deep concerns of service providers regarding production relocations of German industry abroad are an unmistakeable symptom of the generally difficult investment environment in Germany. The energy transition and industry 4.0 offer good potential for growth on the whole. The need for existing plants to increase their levels of efficiency, flexibility and digitalisation is opening up new business areas in which the line between plant engineering and industrial services is becoming increasingly blurred.
Contact: Hendrik Franke / Phone: +49 211 4987 039 / Mail: h.franke@set-online.de
Automotive industry Production In the first ten months of the year, German carmakers produced 4.69 million new passenger cars, slightly less than in the same period last year. Triggering this drop in particular was the relocation of models abroad and the recent extension of inventory days. This year has also seen a shift towards higher-price cars, which is not reflected in the number of units. New model generations boosted the premium segment (up seven percent), executives (up six percent), SUVs (up four percent) and utilities (up three percent). It should also be noted that car suppliers are currently increasing their output at a rate above the industry average. Suppliers are benefiting from burgeoning foreign sales, the trend towards increased electrification and the ever-broadening range of optional features including driver assistance systems and other convenience features.
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Economic growth is leading to more freight transport, which, in turn, is animating the commercial vehicles sector both in Germany and the other European markets. The boom in online trade is spurring demand for vans in particular. In the category of up to six tonnes, new vehicle registrations in Western Europe increased by four percent in the first eight months of the year, a surge of 44 percent in the last four years. German commercial vehicle producers view the current business situation as excellent, but prospects are cautiously positive. Capacity utilisation at 95 percent is considerably higher than the long-term average. The proportion of diesel vehicles in domestic production in the first nine months of the year dropped to 43 percent, the level of 2009. In the same period, the proportion of petrol cars increased to 53 percent, the highest since 2012. Germany is a leading location for electromobility. In the course of the year so far, 128,000 electric passenger cars (including plug-in hybrids) have rolled off the production lines in Germany – three percent of total cars produced. The automotive industry occupies a leading position in this important emerging sector, while the German market is still lagging behind, with a share of electric cars at only half that proportion. Exports Passenger car exports from January to October dropped slightly by two percent down to 3.62 million units. There has, however, been a shift in production towards higher quality segments. The upper mid-range grew particularly, going up by twelve percent. The ratio of exports exceeded 77 percent for the first time. Cars made in Germany are still German industry's most successful export. The first three quarters of the year saw a particularly strong increase in demand from the euro area – the destination of 30 percent of all German passenger car exports. Exports to China, the second most important non-European market after the US, rose by a whopping eleven percent. Exports to the US, in contrast, dropped by eleven percent due to a model relocation. Exports to Germany’s most important partner country – the United Kingdom – were weak, dropping five percent due to the low value of the pound and an overall decline in the demand for cars. Companies in this sector take a largely optimistic view of their prospective exports in the coming months. Foreign orders have also picked up recently, indicating that the year will end with a flourish.
Contact: Dr. Manuel Kallweit / Phone: +49 30 8978 423 30 / Mail: Kallweit@vda.de
Dynamic growth continues in the building materials industry Following a burgeoning start to 2017, the healthy construction sector continued to fuel demand for building materials over the summer. Until and including September, production increased year on year by 2.8 percent. Sentiment in the industry is extremely positive. According to the ifo business climate index, the glass, ceramics, stone and earth processing industries rate current business as extremely good with a plus of 45 percentage points. The prospects for the coming six months have now improved substantially, reaching plus 28 points at the end of October. In view of the continued buoyant demand in construction, this upward trend is likely to continue until the end of the year. For 2017 overall, the bbs (German Building Materials Association) has forecast a production increase of around three percent in real terms. As construction demand is relatively high in all sectors of the main building sector, this development should benefit both the pit and quarry subsectors such as masonry that are closer to structural engineering as well as civil engineering segments such as the natural stone industry. Demand was slightly less pronounced in the finishing trade as construction capacities are largely tied up with new construction projects. Industrial customer groups of the pit and quarry industry are also expected to grow but at a slightly slower pace.
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The pleasing economic development of the construction materials sector in general is expected to cause a slight increase in the number of jobs provided by the industry in 2017. Investments are also expected to increase in 2017. It should be noted that the expected increases in production will vary greatly throughout Germany as demand for construction also varies from region to region and is largely concentrated in urban and high-growth regions and the surrounding areas. Regarding foreign trade, the bbs is expecting a lateral movement of imports and exports in 2017 as a whole. On account of the high transport costs and relatively demand-oriented supply, foreign trade only affects most pit and quarry subsectors in regions close to Germany's borders. Outlook for 2018 Early indicators for the construction industry point towards a continuation of the upward trend in demand in 2018, though with slightly less momentum. Special factors such as a declining demand for refugee accommodation and the high capacity utilisation in the construction sector need to be taken into account here. Expansion in the pit and quarry industry is likely to be slightly lower than the construction trades, as part of construction demand will focus on less material-intensive sectors such as maintenance measures in road construction. Judging by current figures, the pit and quarry industry is expected to increase production by two percent in real terms.
Contact: Christian Engelke / Phone: +49 30 7261 999 29 / Mail: c.engelke@bvbaustoffe.de
Construction industry The construction industry is still riding on the crest of the summer season and had a good start to the second half of the year in August. The enterprises of the main construction sector with 20 or more employees reported an increase in revenue (compared to the same month the previous year) in August of 10.1 percent in nominal terms. Revenue in the first eight months of the year is thus 10.3 percent higher than the same period last year in nominal terms. The construction companies are correspondingly positive about their current situation: 97 percent of construction companies that took part in the DIHK autumn survey view current business as good or satisfactory, a higher percentage than ever before. The companies are also optimistic about the future. 93 percent of those surveyed expect business to stay steady or improve in the next twelve months. The HDB (Central Federation of the German Construction Industry) is thus positive, and continues to forecast a 5.5 increase in production for 2018. This healthy forecast is also based on the continuing high level of orders. In August construction companies reported a nominal increase in orders of 4.6 percent year on year, with an increase of 5.6 percent for the whole period from January to August. According to the ifo Institute for Economic Research, orders in hand extended to a historical high of 3.9 months. This upward trend is however not reflected in incoming orders as calculated by the Federal Statistical Office, according to which orders in August were 3.2 percent down on the previous month after price, seasonal and working-day adjustment. This drop should not be interpreted as a sign of a turnaround in construction activity but rather that incoming orders have simply reached a very high level. Construction companies are planning to take on more employees to process their orders more swiftly. A DIHK survey revealed that every sixth construction company plans to increase its workforce in the next twelve months. 78 percent of the companies surveyed plan to keep their workforce as it is while only six percent plan to cut down on their staff, the lowest level ever. The employment forecast of the HDB (Central Federation of the German Construction Industry) is correspondingly positive. The construction industry workforce is expected to top 800,000 in 2018, counting 100,000 more employees than at the end of the major building crisis in 2006. Apart from taking on more staff, many construction companies (one in five) are also planning to increase their level of
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investments in the next twelve months as capacity utilisation is now comparatively high. Only every tenth company plans to scale down its investments. An increasingly significant reason behind investment is to increase capacities. 27 percent of construction companies affirmed that this was their motivation to invest. For comparison, this proportion was just 13 percent at the start of the upturn in the industry.
Contact: Heinrich Weitz / Phone: +49 30 2128 6144 / Mail: heinrich.weitz@bauindustrie.de
2017 a good year for the German chemical industry 2017 is looking good for the German chemical and pharmaceutical industry. Following a strong start to the year, the industry experienced a setback in the second quarter but was able to increase production again in the third. From January to August, production was 2.6 percent higher year on year. With the exception of petrochemicals, all segments of the chemical industry were able to expand production. The producers of fine and special chemicals are benefiting particularly from the rising industrial demand. Overall, the industry was also buoyed up by a renewed increase in demand from abroad. While prices for chemical and pharmaceutical products dropped after a hefty surge at the start of the year, they were still 3.3 percent higher year on year in September. Industry revenue also saw a robust rise. The increase in revenue up to August year on year was 5.6 percent, with sales growing both in Germany and abroad. It comes as no surprise that companies in the industry are more than satisfied with current business. Outlook: Growth despite risks For the months ahead the bulk of the industry expects the good business environment to continue. Nonetheless the list of potential risks has recently got even longer. These include the stalling Brexit negotiations, the efforts of Catalonia to achieve independence, fears of further EU destabilisation, uncertainty surrounding the course of economic policy under a possible Jamaica coalition in Germany and risks emanating from the US. All things considered, many factors point towards favourable foreign business for the German chemical industry in the months ahead. The US economy is recovering, although the promised investment schemes and tax cuts have still not materialised. As Brazil comes out of its recession, hopes are that economic activity in South America will pick up again. There is also good news from Asia, with the Japanese economy reporting surprisingly strident growth. In China, where economic risks have increased again recently, many signs still point towards continued stable growth. This is likely to have a positive influence on other economies in Asia. Economic recovery in Europe should continue despite the political turbulence. Prospects are also good for domestic business. Germany's economy is still pointing up, driven mainly by domestic demand. Industrial activity remains positive. The demand for chemicals is continuing to grow, but so is the pressure from imports, particularly with base chemicals. Leaps and bounds are therefore not to be expected here. Following a surprisingly strong third quarter, the VCI (German Chemical Industry Association) has forecast an overall two percent increase in the production of chemicals for 2017. In conjunction with higher chemical prices (up three percent) industry revenue is set to increase by five percent to around 194 billion euros. Foreign business is projected to rise even more than domestic business.
Contact: Christiane Kellermann / Phone: +49 69 2556 1585 / Mail: ckellermann@vci.d
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German electrical and electronics industry heading for record revenue The German electrical and electronics industry has recorded impressive increases in the course of 2017 so far. Price-adjusted production in the first three quarters was 4.4 percent over the previous year. Nominal revenue increased in the same period by 6.9 percent to 140.5 billion euros, with domestic sales growing by 4.6 and foreign sales by 8.9 percent. Incoming orders between January and September were up 10.2 percent over the previous year, principally driven by large orders. Domestic and foreign orders increased more or less equally. Capacity utilisation at the start of the fourth quarter was at 88.1 percent, which is considerably higher than the long-term average. Orders in hand extended to 2.7 production months. The size of the workforce in the electrical and electronics industry climbed to 862,000 in August 2017. This means that the industry has created almost 16,000 new jobs since the beginning of the year. The business climate remains at a very high level. In view of the fact that the industry has exceeded all expectations in the course of the year so far, while not forgetting the numerous (global) downward risks, the ZVEI (German Electrical and Electronic Manufacturers’ Association) upwardly revised its forecast for annual growth of real production in September by one percentage point up to 2.5 percent. Nominal revenue is expected to top the record high of 181.9 billion euros achieved in 2008 this year. Double-digit growth in electrical and electronic industry German electrical and electronic exports are heading for a fourth consecutive record year. From January to August 2017 exports (including re-exports) increased by 10.7 percent over the previous year, reaching 129.8 billion euros. Exports to industrialised countries rose 9.7 percent to 85.3 billion euros, while exports to the advanced economies surged even higher, by 12.5 percent to reach 44.5 billion euros. China has consolidated its position as the largest importer of German electrical and electronic goods in the course of the year so far. The industry's exports to China increased in the first eight months of the year by a sharp 18.4 percent over the previous year, to 12.3 billion euros. Exports to the second largest importer – the US – increased by 8.8 percent to 11.5 billion euros in the same period. German electrical and electronic goods to the value of 38.6 billion euros were delivered within the euro area (up 9.6 percent). The export expectations of German electrical and electronic companies continue to be decidedly positive, also in view of the broad global economic upturn. For 2017 overall, the ZVEI once again expects exports to clearly outstrip the record volume of 182.1 billion euros in 2016.
Contact: Jochen Schäfer / Phone: +49 69 6302 332 / Mail: schaeferj@zvei.org
Brighter prospects for foundry industry Sentiment among German foundries at the end of October 2017 was markedly better than one year ago. Incoming orders are very brisk in some areas of the major casting-related machine building sectors such as agricultural technology and the machine tool industry. Hydraulics, always an early indicator for major machine building sectors, is growing dynamically. The same applies to other sectors such as plastic and rubber machinery, food and packaging machines and robotics and automation. Demand from industry's main customer, road vehicle manufacturing, remains high. It will be difficult to achieve a tangible increase in volume here. In the first eight months of 2017, the production of cast components rose by just over two percent over the same period last year after seasonal and calendar adjustment. Breaking this figure down by dominant material shows
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that the industry is still experiencing very diverse economic trends. Iron and light metal foundries increased production, while steel and heavy non-ferrous metal foundries decreased production. The 600-odd companies operating in the industry currently employ around 80,000 workers according to a survey by the industry's trade association, the BDG. Expectations of the industry in October 2017 on the course of business in the next six months are cautiously optimistic. There seem to be too many question marks in relation to the business environment both on the national and international level to warrant a more certain upward trend. The coalition talks in Germany have so far not given any indication, at least in public, of the future course of economic or energy policy, which is particularly relevant to this industry. New flashpoints, like the recent developments in Spain, show just how fragile economic recovery is, and with it the basis for investment decisions and orders for suppliers. Cast component exports influenced by international investment climate In 2016, foundries’ foreign sales dropped by three percent to just under 12.4 billion euros. The share of exports was just under 34 percent like the previous year. In the first eight months of 2017, sales (according to the sales index) rose by almost three percent over the same period last year, largely due to an over-proportional increase of four percent in foreign sales. Export prospects as of October 2017 are slightly positive overall but still rather subdued. Almost three quarters of foundries expect foreign demand to stabilise at the current level. It should be noted here that around 80 percent of cast components produced in Germany are end-used abroad. Indirect exports via the German automotive and machinery industries are therefore a powerful influencing factor.
Contact: Heiko Lickfett / Phone: +49 211 6871 214 / Mail: heiko.lickfett@bdguss.de
Ceramics industry 2016 was an exceptionally heterogeneous year for the fine ceramics industry, with an overall drop in revenue of 2.5 percent. The current year has also brought very divergent results for the different subsectors represented by the fine ceramics industry trade association, the BVKI, although the overall trend for the year is positive. After a mixed year in 2016, technical ceramics was back to its usual strength, although there were difference here too. While electronic ceramics, chemical and processing technology and medical products did well, ceramic insulators and wear protection had problems. Total revenue of the industry is currently 3.1 percent over the same period last year. Exports, which were particularly weak in 2016, have increased this year. Domestic sales remained around level with last year. However, orders in hand are very encouraging, so the overall annual result may still improve further. Dinnerware producers have had a difficult year so far. Despite the pleasing propensity to spend in Germany, dinnerware and decorative ceramics have not benefited from the economic upturn. Total revenue is currently three percent below last year, with both domestic sales and foreign sales lagging behind the figures for 2016. In contrast to last year, traditional household dinnerware has so far outperformed professional dinnerware (HoReCa). The upcoming Christmas season may still provide positive momentum for (household) dinnerware. Results from manufactories are around the same as last year. While foreign business has picked up somewhat, domestic demand has dropped by about the same extent. The traditionally strong Russian market remains an exception and has still not picked up. There is still a lot of potential for growth here. Domestic business is struggling in the face of the drop in specialist retail sales. The number of incoming orders clocked up so far is no cause for optimism, although just a few large orders would be enough to swing the trend around completely.
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German stove tile producers are still operating in a difficult and contracting market segment. Following some market shake-out last year, which benefited German stove tile producers, declining sales were on the cards again this year. Revenue so far is 5.9 percent down on last year. Incoming orders do not signalise a significant turnaround in the remaining months of the year. Overall, the fine ceramics industry managed to increase revenue by 1.2 percent, boosted by the upward trend in technical ceramics.
Contact: Philipp Pickelmann / Phone: +49 9287 808 25 / Mail: pickelmann@keramverband.de
2017 the first year of upturn for machinery production 2017 has been a better year for the industry than originally predicted by the German Engineering Association, the VDMA, which revised its initial forecast of a one percent increase (from October 2016) to three percent in June this year. The unusually prolonged period of very moderately contracting and then almost imperceptibly expanding production from 2012 to 2016 seems to have ended. Unfortunately, momentum for growth once again came almost exclusively from abroad. There is little impetus for investing in new machines and plants in Germany, not least because of the lack of policies conducive to industrial investment. Exports grew on a broad regional basis. Overall, in the first eight months of the year, revenue was up by a real 5.4 percent and a nominal 6.6 percent over last year. Exports to China grew most (up 25 percent), followed by exports to the US (up nine percent). The rise in exports triggered a real three percent increase in the production of machinery and plants in Germany in the first eight months of the year. This increase has also lifted capacity utilisation, which was at 87.9 percent in October, after almost constantly languishing under the average rate of 85.9 percent since autumn 2012. Twelve percent of companies are experiencing problems due to a shortage of raw materials, while 24 percent are having difficulties in finding skilled labour, certainly also a product of demographic change. The fact that 16 percent of companies could produce more if they had more orders is a clear sign that the upturn has by no means reached all machinery manufacturers. 2018 viewed with cautious optimism Ideally, an upturn gathers momentum in its second year. However, the VDMA is not expecting the industry to pick up speed next year and has forecast growth of three percent for 2018 as well. Regional shifts in growth are subduing optimism. The VDMA economists expect exports to the US and EU partner countries (excluding the United Kingdom) to grow at around the same rate as this year. Exports to the UK could, however, face a doubledigit drop. The uncertainty and lack of progress in the Brexit negotiations is poison for investments. Machinery exports to China should continue to grow, although most probably with less momentum. New business is required to compensate for the drop in UK business and the slowdown in trade with China and keep up the current rate of growth. If domestic business would finally pick up, this could fill the gap – a not entirely unrealistic prospect. Capacity utilisation in industrial production facilities – the biggest customer of machinery production – is high. It is however by no means certain that domestic orders will actually gather momentum and maintain the current growth rate for the industry as a whole.
Contact: Olaf Wortmann / Phone: +49 69 6603 1373 / Mail: olaf.wortmann@vdma.org
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Nonferrous metal industry The German nonferrous metal industry is optimistic about 2018. With 112,000 workers employed in around 650 companies, the industry produced 6.5 million tonnes from January to August 2017 (0.5 percent more than the previous year) according to preliminary figures. Revenue increased by ten percent to 39 billion euros. The main factor fuelling revenue growth was the increase in metal prices on the stock markets. Domestic business accounted for 54 percent of revenue, making it the industry's biggest market. The nonferrous metal industry is divided into the following stages of the value chain: production (raw metal), semi-finished products (ribbon, sheets, rods, profiles, pipes and wire), further processing (foil, thin ribbon, tubes, aerosol cans, other cans and powder), casting and hot-dip galvanising. From January to September 2017, the aluminium industry produced around 988,000 tonnes of raw aluminium, three percent more than the same period last year. Producers of semi-finished aluminium products, by contrast, recorded a drop of one percent down to 1.9 million tonnes. Production in the aluminium further processing sector increased by three percent to 264,000 tonnes. In heavy nonferrous metals (copper, zinc, lead, nickel and tin), production grew by three percent in the same period up to 696,000 tonnes. The producers of semi-finished heavy nonferrous metal products, on the other hand, experienced a drop in production of two percent to 1.4 million tonnes. In the first nine months of the current year, nonferrous metal foundries produced 954,000 tonnes of cast parts, two percent more than in the same period in 2016. For 2017, the nonferrous metal industry expects production to remain stable or rise slightly above the previous year. United Kingdom still most important export market, with US ranking tenth The foreign revenue of the nonferrous metal industry from January to September 2017 amounted to 18 billion euros. This corresponds to an export quota of 46 percent. Foreign trade in metal and semi-finished products is very divergent. Germany imports considerably more metal than it exports, reflecting the dependence of German industry on imports from abroad of metals such as aluminium, nickel, zinc, tin and some rare metals. Metal imports in the first six months of 2017 dropped by three percent over the previous year to 2.1 million tonnes. Metal exports rose by one percent to 463,000 tonnes. The export-oriented semi-finished products industry increased its exports in the same period by one percent over the previous year to 1.5 million tonnes. At 985,000 tonnes, imports in this sector were up one percent. Imports of some semi-finished products from China recorded high rates of growth – though starting from what is still a very low level. In the first six months of 2017, the United Kingdom was again the most important export market for the German nonferrous metal industry. Thirteen percent of metal and semi-finished exports were destined for the UK, which is even one percentage point more than before the Brexit vote in the first six months of 2016. The United Kingdom imported a total of 256,000 tonnes of nonferrous metal and semi-finished products, ten percent more year on year. A large proportion of these products were semi-finished products, mainly aluminium. In the first six months of 2017, the United States was again the tenth biggest export market for German metal and semi-finished products and the most important destination country outside Europe. Three percent of the industry’s exports went to the US. At 64,000 tonnes in the first six months of 2017, exports were down 1.5 percent on the first six months of 2016. The German nonferrous metal industry delivered about the same volume to domestic industry customers who in turn exported to the US.
Contact: Oliver Eisenberg / Phone: +49 30 7262 071 67 / Mail: eisenberg@gdb-online.org
Shape of the steel industry in summer 2017 Steel demand in Germany is on a moderate path to recovery. Following a drop in incoming orders in the second quarter, it gained ground in the summer months and, eight months into the year, almost drew level with last year. The ifo business climate index for the German steel industry is still pointing up. In the further course of the year,
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the upward trend could well be further boosted by the inventory cycle. The production of crude steel has continued on a moderate upward trend this year so far, with an increase of two percent year on year. The demand for steel is on track to increase by three percent to 41.6 million tonnes this year. Crude steel production is expected to expand by around 1.5 percent to 42.7 million tonnes. The slow recovery in global demand for steel is supporting the industry upturn. Incoming orders for German rolled steel producers from abroad increased by seven percent in the first eight months of the year. Steel exports stepped up four percent in comparison to the same period last year. Momentum for growth came in particular from countries outside the EU, while orders from the EU only rose slightly. The risks are still there. While steel demand in the EU has stabilised, it is still very low in many countries. The import crisis in the EU has not yet been overcome. In the first eight months of the year, rolled steel imports increased by another three percent compared to the same period in 2016. Imports from India, South Korea and Turkey are substituting the drop in steel imports from China. New production capacities are being set up in many countries, often with state support.
Contact: Dr. Martin Theuringer / Phone: +49 211 6707 105 / Mail: martin.theuringer@wvstahl.de
Steel and metal processing The steel and metal processing industry has increased production by 5.2 percent year on year in the course 2017 so far. August was a surprisingly good month with an 8.3 percent increase in production, prompting the German steel and metal processing industry association, the WSM, to upwardly revise its forecast from one to four percent. If demand remains as stable as it has been so far, the annual increase may be higher still. However, judging by past experience companies operating at comparatively high capacity utilisation do not always get the best results. The cost pressure in steel and energy is still massive, as is the price pressure from customers. In this difficult situation, the wage increase called for by the trade unions cannot be shouldered by mediumsized enterprises, especially as the future course of the economy remains so unpredictable. In August, revenue of the steel and metal processing industry was up 9.1 percent over the previous month. Domestic sales again lost ground against exports, rising 7.8 percent compared to a hefty 11.7 percent increase in exports in August. Revenue increased by 5.5 percent in the period from January to August. Sentiment in the steel and metal processing companies remains good even after the federal elections. The current business situation was seen to have improved from September to October, rising by 4.1 points to reach 48.8, not far below the record level of 50.2 recorded in May 2007. Future business prospects are viewed with more caution, dropping by 8.6 points from September to October, although this indicator increased unusually steeply the previous month. Alongside the longwinded process of forming the new federal government, the prospect of rising personnel and commodity costs in 2018 have no doubt contributed to casting a slight cloud over the business climate. Companies have steadily increased their workforce in the course of the year. In August the industry had two percent more employees year on year. Production capacity utilisation also increased markedly, rising from 83.5 percent to 86.0 percent. In view of this situation, we expect a gradual decrease in the reticence to invest and a cautious increase in production capacities over the coming months. The risks to the global economy seem to have melted into the background considering the positive indicators and good news from other industrial sectors. But these risks remain virulent. Hopes are that a liberal pro-busi-
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ness course will be agreed on in the exploratory talks commencing today between the potential coalition partners. A national solo effort in the controversial energy and climate protection issues should be avoided at all costs. Our level of prosperity can only be maintained if we continue to nurture our internationally competitive industrial core, which is ultimately also the basis for an ambitious climate protection agenda.
Contact: Holger Ade / Phone: +49 233 1958 821 / Mail: hade@wsm-net.d
Current state of business for the German textile and clothing industry Revenue in the industry increased somewhat overall (up 0.6 percent in August), although only due to the continued positive trend in textiles (up 1.9 percent). Revenue in clothing slipped by 0.9 percent in August. Aggregated revenue for the year 2017 as per August was thus still 0.7 percent higher year on year. The trends seen in the last few months have continued, with momentum in textiles currently coming from upstream, while the revenue drivers of the past such as non-wovens and technical textiles are not really getting off the ground. In the clothing sector, producers of industrial and occupational clothing as well as hosiery saw revenue rise. Revenue for 2017 for the whole industry is forecast to increase by 1.7 percent (textiles up two percent, clothing up 1.5 percent). This level of revenue is still attainable if results are good for the rest of the year. Employment in the industry remains very stable. The workforce increased in both segments (textiles up one percent, clothing up 0.4 percent) as per end of August. Overall, the industry currently employs 0.8 percent more workers than one year previously. In the course of the year, domestic production in textiles increased while dropping in clothing, although the latest figures show a slight increase in production again. In the first eight months, 3.3 percent more textile products and one percent less clothing products were produced in Germany. Foreign business increased in August as in the previous months, particularly in clothing (exports as per August: clothing up 13.6 percent, textiles up 1.8 percent, overall increase 8.6 percent) especially to Switzerland. Clothing imports increased (up 2.4 percent as per August) while textile imports dipped by 0.1 percent. The import surplus was 9.9 percent less than in the same period last year. Outlook The level of orders is divergent for textiles and clothing. While the figures for textiles indicate a relatively stable growth in revenue, the order situation in clothing has been difficult in the course of the year so far, although it has improved quite considerably in the current month. The extremely good sentiment in German industry overall is only partially shared by textiles and clothing. While – according to economic forecasts – clothing is currently back on an upward trend after major fluctuations in the recent past, sentiment in textile companies has hardly changed in the last few months and no clear trend has yet emerged. Prospects for clothing are cautiously optimistic for the coming months. The moderate but steady increase in the workforce in both segments is cause for optimism. If the pace picks up in the coming months, the revenue forecast for 2017 (increase of 1.7 percent overall) is still within reach.
Contact: Marcus Jacoangeli / Phone: +49 30 7262 2024 / Mail: mjacoangeli@textil-mode.de
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Industry Report 23/11/2017
Imprint Bundesverband der Deutschen Industrie e.V. (BDI) Breite Straße 29, 10178 Berlin www.bdi.eu T: +49 30 2028-0 Authors Thomas Hüne T: +49 30 2028-1592 t.huene@bdi.eu Dr. Christoph Sprich T: +49 30 2028-1525 c.sprich@bdi.eu Editorial / Graphics Dr. Klaus Günter Deutsch T: +49 30 2028-1591 k.deutsch@bdi.eu Marta Gancarek T: +49 30 2028-1588 m.gancarek@bdi.eu*
This Industry Report is a translation based on „Industriebericht – November 2017” as of 13 November 2017.
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