Zvei Business Cycle Report: orders, production and domestic sales decrease

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The Zvei Business Cycle Report published in October shows that in August the German electrical and electronic industry has received 3.6% less new orders than a year earlier. The decline was especially caused by lower domestic orders, which failed their pre-year level by 7.9%. In contrast, foreign customers slightly raised their bookings by 0.7%. Here new orders form the euro area fell by 2.3%, whereas bookings from third countries picked up by 2.3%. All in all, new orders develop weakly at present. Accumulated from January through August 2014 purchase orders are only very slightly up on their pre-year level (0.3%). Bookings from domestic clients have stagnated, while new orders from foreign customers rose by 0.7%. Bookings from the euro zone and from third countries increased by 0.9% and 0.6% (yearon- year), respectively.

zvei 1

Production in August moderately down for the second time in this year
Production – adjusted for price – of the E&E industry’s firms has been 1.4% down on its pre-year level in August 2014. It was for the second time within the current year that the monthly output fell (on an annual basis). From January through August of this year production has still grown by 1.7% (again year-on-year rate). However, in particular due to the geopolitical tensions as well as the sluggish performance in the euro area, which cause uncertainty and bear down on the investment climate, downward pressures currently prevail. Accordingly, the sector’s companies’ production plans have been revised downwards further in September of this year.

zvei 2

Turnover: domestic sales down, foreign sales up in August
With 13.1 billion € the sector’s sales slightly failed their pre-year level by 0.8% in August 2014. While domestic turnover decreased by 3.7% to 6.5 billion €, foreign turnover increased by 2.2% to 6.6 billion €. Businesses with euro zone and third country customers came to 2.3 billion € (+1.9% year over year) and 4.3 billion € (+2.4%), respectively. In the full period from January through August of this year the German E&E industry’s turnover amounted to 110.9 billion €, +2.1% compared to the same period last year. With a plus of 0.9% to 55.7 billion € domestic sales picked up less dynamically than foreign sales, which grew by 3.4% to 55.2 billion €. Here turnover with euro area countries rose by 1.9% to 20.1 billion €, and sales to third countries increased by 4.3% compared with a year earlier to 35.1 billion €.

zvei 3

Business climate declines markedly in September
The business climate in the German E&E industry has further declined markedly in September of this year. It sank to its lowest level since April 2013. At least it is still slightly in the positive range. Both the sector’s companies’ assessment of the current economic situation and their overall business expectations for the next six months to come have been downgraded considerably in September compared to August. 29% of the firms now evaluate their present situation as good, 54% as stable and 17% as bad. At the same time, 16% of the companies reckon with rising, 70% with steady and 14% with decreasing activities in the coming six months. Export expectations for the next three months to come have likewise fallen significantly in September. However, they still lie above the zero line.

zvei 4