In the first quarter of 2012, order bookings in the German machine tool industry fell by seven percent year on year, according to the German Machine Tool Builders' Association (VDW). Given the dominance of the German industry in the mechanical engineering sector, data released by the VDW are seen as a barometer for general business conditions in the EU.
Domestic demand in Germany in the first quarter this year decreased one percent, while export orders fell by nine percent, both compared to Q1 2011.
"Capacity utilization is still holding up well in Germany's industrial sector, which it is investing in additional capacities for coping with its orders," said Dr. Wilfried Schäfer, executive director of the sectoral organisation at the VDW. "The German machine tool industry is still performing well. By reason of the order backlog, a rise in production output for 2012 is virtually assured," he added.
The capacity utilization in April of this year was at 95.1 percent, remaining almost stable in comparison to October 2011. The order backlog, at nine months, is also at a similar level to October of last year. The VDW is forecasting growth of five percent in production for the current year. Though demand is quietening down, Dr. Schäfer added that this has already been factored into the pricing and will give the companies breathing space for addressing strategic issues, like expanding their business operations in Asia.