ZVEI, German electrical and electronic manufacturers’ association, has published its Business Cycle Report. According to the research, new orders in the German E&E (electrical and electronic) industry have surpassed their previous year’s level by 3.6% in September 2013. While domestic clients booked 0.7% more than a year before, foreign customers even ordered 6.3% more. Bookings from third countries (+7.0%) increased more strongly than those from the euro zone (+4.9%). In the first nine months of 2013 new orders rose by 1.7% (year over year), potentially confirming first tendencies of recovery observed in the summer months. Domestic orders fell slightly by 0.5%. Foreign orders, however, rose by 3.8%. Bookings from the euro area declined once again by 1.1%. In contrast, customers from third countries raised their orders markedly by 6.8%.
Production and turnover
Production – adjusted for price – of the German E&E Industry’s firms exceeded its pre-year level by 2.1% in September 2013. Yet from January through September it was still 3.7% down on the prior year. Altogether the recovery presumeably sets in too late and turns out to be too muted for the original 2013 forecast of plus 1.5% production growth to be still achievable. Sales amounted to 15.1 billion € and exceeded their pre-year level by 3.4% in September 2013. Domestic and foreign turnover increased by 1.9% to 7.7 billion € and 4.9% to 7.4 billion €, respectively. In the first three quarters of this year the sector’s sales came to 123.2 billion €, leaving them 3.1% lower than a year earlier. Businesses with domestic customers declined by 5.7% to 62.7 billion €, foreign sales rose by 0.5% and amounted to 60.5 billion €.
Business climate decreases slightly in October, but remains positive
After its decrease in the preceding month the business climate in the German electrical and electronic industry has fallen off slightly in October of this year, too. However, it remains positive. Compared to September the companies’ assessment of their current economic situation has deteriorated somewhat in October. In contrast, overall business expectations for the next six months to come took the opposite direction. They have increased once again. The 26% of the sector’s firms now evaluate their present situation as good, 56% as stable and 18% as bad. At the same time, 20% of the companies reckon with rising businesses in the next six months ahead. 73% and 7% of the firms expect stable and declining activities, respectively.
Capacity utilization rises surprisingly strong at the start of the 4th quarter 2013
Although production activity has developed rather sluggishly recently, the level of capacity utilization in the German E&E industry has risen markedly at the beginning of the 4th quarter of 2013. It went up by almost one and a half percentage points from 82.3% to 83.7% of the normal full use level. Thus, the utilization ratio now exceeds its long-term average value of 83% once again. However, the surge may be influenced by restructuring activities, which have taken place in the recent past. The reach of unfilled orders has increased from 2.6 to 2.7 production months at the beginning of this year’s 4th quarter. Here the figure now is above its long-dated average again, too. Asked about obstacles to their production activities, 20% of the sector’s companies by far perceive a lack of demand as the biggest hindrance up to date.
