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According to the ifo business survey, the export expectations of mechanical engineering companies for the next three months are currently at the lowest level since mid-2020.
Foto: shutterstock

VDMA records respectable results – but at the same time slowing momentum

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Autor: Charlotte Lange

Datum: 04. Aug. 2023

In the first half of 2023, mechanical engineering exports developed well overall. However, momentum is declining noticeably, and a lack of orders is depressing export expectations.

In the second quarter of 2023, the export-heavy mechanical and plant engineering companies from Germany once again achieved a respectable export result, albeit with less momentum. According to preliminary results from the Federal Statistical Office, machine exports increased nominally by 8 percent in the second quarter compared to the previous year. In the first quarter of 2023, growth was still 15.3 percent. In the entire first half of the current year, machine exports recorded a nominal increase of 11.5 percent to 104 billion euros. Adjusted for prices, machine exports increased by just 3 percent in the first half of the year.

“The repeated increase in exports is due to inflation on the one hand and to the fact that the supply chains have eased significantly in many areas on the other. In this way, machine and plant manufacturers can further reduce their sometimes high order backlogs,” comments VDMA chief economist Dr. Ralph Wiechers the numbers. “In view of double-digit order losses, however, we have to be prepared for further declining export volumes. According to the ifo business survey, the export expectations of machine builders for the next three months are currently at the lowest level since mid-2020.”

Export growth to the USA remains significantly stronger than to China

Machine deliveries to the USA, the largest export market, made a positive impression. From January to June, they continued to increase strongly by a nominal 21.6 percent compared to the previous year. The export value came to around 13.8 billion euros in the first half of the year.

“There are two main reasons for the strong demand from the US: First, given the rapid tightening of monetary policy, the US economy is proving resilient with robust consumer demand and a strong labor market,” says Dr. Wiechers the objectives of the Inflation Reduction Act and the CHIPS Act also require machines and systems from Europe.”

“Many companies have started the new year optimistically when it comes to business in China. So far, however, there has been no clear economic upturn.” Ralph Wiechers, VDMA Chief Economist.

The China business, on the other hand, is not really gaining momentum after the corona measures were lifted at the end of 2022. In the first six months, German machine exports to China only increased by a nominal 4.4 percent to a total of 9.5 billion euros.

“Many companies have started the new year optimistically when it comes to business in China. So far, however, there has been no clear economic improvement. Industrial production in China hardly changed for the better in the second quarter compared to the previous quarter.” wiechers

Machine exports to the EU with a double-digit increase

The growth in German machine exports to the partner countries of the European Union was also in double digits, with a nominal increase of 10.5 percent. Machinery exports in the first six months corresponded to a value of 46.3 billion euros. Among the most important buyers of German machinery and equipment, France in particular recorded high nominal growth of 18.7 percent. Agricultural machinery in particular contributed to this strong growth. German machine exports to Italy increased by a nominal 8.9 percent, to the Netherlands by a nominal 8.5 percent and to Poland by a nominal 13 percent. In the first half of the year, 51.4 percent fewer machines and systems were delivered to Russia from Germany, after business had already slumped the previous year. Russia’s share of total German machine exports is now only 0.8 percent, and the trend is falling.

 

(Source: VDMA)