Monthly bulletin June 2017 Monthly bulletin | Economic and statistic affairs

Incoming orders in Germany Mechanical engineering Demand from euro countries remains dynamic Incoming orders in mechanical engineering in April fell short of the previous year’s level by 3 percent in real terms, while domestic orders dropped by 15 percent. The decline has nothing to do with an economic slump, but is largely attributable to a base effect: Thanks to several business deals involving large industrial plants, April 2016 was the strongest month of last year. Concerning orders from abroad, the April results painted a differentiated picture. While demand from non-euro countries saw growth of 1 percent, orders from EU partner countries increased significantly by 14 percent. Monthly bulletin | Economic and statistic affairs June 2017

Production of German mechanical engineering During the first three months of the year, production was 4.5 percent higher, according to preliminary calculations, than the previous year. But it must also be noted that the first quarter had three more working days than the first quarter 2016. However, a workday effect will pose a burden on the rate of change for production over the course of the year. In total, 2017 has three workdays less than 2016. The forecast made by VDMA economists in October 2016 for 2017 predicts a one percent growth in production in real terms. Another plus is the good business climate that prevails almost everywhere in the world. However, there are also several burdensome factors. Nonetheless, VDMA stands by its forecast. Monthly bulletin | Economic and statistic affairs June 2017

Capacity utilization in German mechanical engineering At 85.6 percent, the capacity utilization in April fell slightly short of the long-term industry average. This means the utilization rate has risen slightly since October 2016 after it had stagnated at the bottom end of a still-tolerable level since the end of 2012, with an exception in the fall of 2014. This development is in line with the production curve, since it also displayed a moderate upward tendency since the fall of last year. The absolute low in the period since 2012 was recorded in July 2016 at 83.3 percent, the highest result was 88.0 percent in April 2012. Monthly bulletin | Economic and statistic affairs June 2017

Employees in German mechanical engineering In March employment went up by another 4'000 to now 1.011 million. This is a 0.5 percent growth yoy and constitutes a stronger seasonal pick-up in labor demand than the year before. Due to a change in classification of a production entity the employment figure has been downsized by more than 9'000 employees in 2016. The revised figures for the year 2016 are therefore no more comparable to former years. Monthly bulletin | Economic and statistic affairs June 2017

German machine export In March 2017, German machinery exports exceeded the previous year’s result by 7.6 percent. Preliminary figures for the first quarter show a plus of 6 percent. Export business with the two most important export markets for the German mechanical engineering sector, USA (plus 7.6 percent) and China (plus 15.5 percent), was above average. Positive: Deliveries to Russia, Mexico, India, South Korea and Japan were also significantly higher than in the previous year. Deliveries to EU countries increased by 2.1 percent. However, preliminary data indicates that deliveries to France, Italy, the Netherlands, Poland and Hungary fell short of the previous year’s figures. During the past few years, late reports amounting to 5 percentage points were regularly received from EU countries, which means that growth may indeed be possible following respective corrections. Monthly bulletin | Economic and statistic affairs June 2017

Incoming orders in Germany for selected subsectors In the last three statistically verifiable months (February – April 2017), 20 of the 28 subsectors (which are taken into account separately in the VDMA incoming order statistics) experienced an increase compared to the previous year. Four subsectors recorded growth of 30 percent and more. These include metallurgical plants and rolling mills, agricultural machinery, process plant and equipment and mining. Food processing and packaging machinery, foundry machinery and Power Systems (turbines), on the other hand, suffered losses of 10 percent or more. Monthly bulletin | Economic and statistic affairs June 2017

Business situation and expectations Manufacturing industry in Germany In manufacturing the Ifo-business climate-index rose significantly. Assessments of the current business situation improved, reaching their highest level since July 2011. Business expectations are also far more optimistic than last month. Capital goods manufacturers in particular reported very good ongoing business and their order books are filling up. Monthly bulletin | Economic and statistic affairs June 2017

Economic situation of German mechanical engineering Monthly bulletin | Economic and statistic affairs June 2017

Contact. Dr. Ralph Wiechers VDMA Volkswirtschaft und Statistik Lyoner Str. 18 60528 Frankfurt Phone +49 69 6603-1371 E-mail ralph.wiechers@vdma.org Monthly bulletin | Economic and statistic affairs June 2017