German machine tool industry posts significant rise in new orders

Tuesday, 24 August 2010 13:35:17 (GMT+3)   |  
       

In the second quarter of 2010, order bookings in the German machine tool industry showed another unexpectedly steep rise of 71 percent, while domestic demand soared by 81 percent and export orders were up by 66 percent, all on year-on-year basis, according to German Machine Tool Builders' Association (VDW). Given the dominance of German industry in the mechanical engineering sector, data released by VDW are seen as a barometer for general business conditions in the EU.
 
During the first half of 2010, overall demand in Germany was 58 percent up on the preceding year's figure. Domestic customers ordered 51 percent more than in 2009, while export orders rose by 61 percent.
 
"The order engine is running at full throttle again," commented VDW's managing director Dr. Wilfried Schäfer. "The steepest slump in the history of the machine tool industry has now been followed by the highest growth rates we've seen since the early 1970s," Dr. Schäfer added, underlining the high rate of growth in domestic demand during the year's second quarter. This, he added, shows that production output has found its feet again in wide sections of German industry.
 
Other important statistics for machine tool trends are also pointing upwards. Capacity utilization has climbed from its nadir in the middle of last year, at 65.9 percent, to 76.3 percent in June of this year, while the order backlog, following its low point of 5.6 months in October 2009 has recovered to 6.9 months in June of this year.
 
Meanwhile, VDW's managing director called for levelheadedness in assessing the situation. There continue to be imponderables, he pointed out, such as setbacks in the US market, the anticipated slowdown in China's growth or risks in the financial market. "The VDW's forecast of a 12 percent fall in sales remains in force," he affirmed.

Three aspects, he said, indicate that despite the improved situational environment the sales figures will nonetheless show a minus. Firstly, the order backlogs at the companies continue to be thin. Secondly, the high growth rates in order bookings are also attributable to a baseline effect. The order volume showed a minus of 66 percent in the first half of 2009. And finally, the key question is when the order bookings will show up in the actual sales figures.


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