ZVEI Business Cycle Report February 2017 - Interactive

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Increase in new orders in December 2016, but slight decline in the full year

New orders in the German Electrical and Electronic Industry have risen by 2.7% (year over year) once again in December of last year. While domestic bookings decreased by 4.2%, foreign bookings strongly increased by 8.6%. New orders from euro zone customers even soared by 20.3%. Clients from third countries raised their bookings by 2.6%.

In the full last year 2016 new orders failed their pre-year level by 1.0%. However, remember that the 2015 value had benefitted from bulk orders. Domestic and foreign bookings were each 1.0% down on their pre-year level in 2016. New orders from the euro area rose by 1.0%, but those from third countries fell by 2.2%.

Growth in production by 1% in 2016, capacity utilization slightly on the decline

The real production – i.e., adjusted for price – of the German E&E Industry has been down by 3.5% from a year ago in December 2016. Hence, in the full twelve months of the last year the sector’s output grew by 1.0%. The performance this time exactly matched the ZVEI’s corresponding forecast (formulated at its time in January 2016).

The capacity utilization within the do mestic E&E Industry has been slight 0.7%-age points down at the start of the first quarter of 2017. It stands at 85.0% of the normal full use level now. The average reach of unfilled orders remained at 2.8 months.

The companies’ production plans have been lifted somewhat in January. 22% of the firms intend to raise their output in the next three months to come, whereas only 8% plan to reduce it. The rest calculate with maintaining their current production level.

Turnover picks up very slightly in 2016 to nearly €179bn

After the moderate increase in the previous month sales of the domestic E&E Industry missed their pre-year level by 1.8% in December 2016. They came to €16.0bn. Domestic turnover (-0.5% to €7.7bn) fell less markedly than foreign turnover (-2.9% to €8.3bn). While businesses with euro zone clients sagged by 15.8% to €2.8bn, businesses with customers from third countries were 5.3% up and reached €5.5bn.

In the full period from January through December of the last year the sector’s overall turnover picked up very slightly by 0.2% to €178.6bn. Here domestic and foreign sales amounted to €87.0bn (+0.3%) and €91.6bn (+0.1%), respectively. Turnover with partners from the euro area decreased by 2.9% to €33.3bn, whereas sales to third countries increased by 1.9% to €58.3bn.

Slight increase in business climate in January, too

Despite high uncertainty (due to Brexit and US vote, failed constitutional referendum in Italy and so forth) the business climate within the German E&E Industry has slightly increased in January 2017, too. Although the companies’ assessment of the current economic situation declined somewhat compared to the previous month, their overall business expectations picked up markedly.

38% of the firms evaluate their present situation as good, 56% as stable and merely 6% as bad. Regarding expectations, 25% of the companies reckon that their businesses will rise during the next six months to come. 64% and 11% await steady or rather abating affairs, respectively. Here the balance out of positive and negative answers increased from 8 (in December) to 14%-age points in January.

Eventually, after the huge increase in December export expectations within the sector stayed more or less the same in January.

Business Climate − Up to January 2017

Balance of positive and negative answers, %

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Source: ifo Institute

Source: Destatis, ifo Institute and ZVEI's own calculations
Some data are preliminary
1) end of reporting period
© ZVEI, 7 February 2017