News: Machine construction with catastrophic slump in orders – ifo pessimistic for industry

Beispielfoto für Maschinenbau

Yes, yes, it’s clear, those of FMN (i.e. us) are always negative? That is not the case! The situation is the way it is. At first sight the overall picture in Germany still looks acceptable. Service providers and construction are doing so well that the overall economy in Germany is still just above the zero line. But the situation in industry is really very bleak. Even though we have just received early reports of monthly growth, industrial production is clearly declining year-on-year. And the latest news on the German mechanical engineering industry is just now coming in. The German Engineering Federation (VDMA) is reporting a 15% drop in incoming orders for the month of November compared to November 2018. That is severe! You put 1 and 1 together. What is now lacking in incoming orders will be lacking in actual production in a few months’ time! Quote VDMA:

From the EURO partner countries 11 percent fewer orders came in. for the non EURO countries a minus of 16 percent is on the books. “This means that the negative development of the past months is continuing,” says VDMA Chief Economist Dr. Ralph Wiechers. “When assessing the current figures, it must of course be taken into account that the bar for the comparison with the previous year is still relatively high. In the three-month period from September to November 2019, the decline in incoming orders amounts to a total of 10 percent (domestic minus 12 percent, foreign minus 9 percent).

ifo pessimistic about industry

The ifo Institute published a pessimistic forecast for German industry this morning. While the negative signs are brightening up a little for some sub-sectors of industry, the negative forecast for car manufacturers and mechanical engineering is becoming even more pronounced. Quote ifo:

German industry will continue to cut back its production in the coming three months. However, this will be slower than expected in the previous month. The ifo index for the production expectations of industry rose gently from minus 6.6 to minus 5.7 points in December.

Developments in the individual sectors varied considerably. The brightest ray of hope was provided by the chemical industry. Here the index rose significantly from minus 12.2 to plus 8.1 points. Manufacturers of rubber and plastic goods also reported a positive development from plus 1.1 to plus 6.4 points. The manufacturers of metal products reported only a slight improvement from minus 21.9 to minus 20.8 points.

In contrast, production expectations in the automotive sector deteriorated from minus 20 to minus 24 points and in the mechanical engineering sector from minus 8.1 to minus 12.7 points. For the manufacturers of electrical equipment, the value fell from minus 11.3 to minus 14.3, and in metal production and processing from minus 26.8 to minus 35.3 points.

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