Economic & Statistical Toolbox - CECIMO...oolbox 2019 6 92 109 108 117 0 20 40 60 80 100 120 140 160...

European Association of the Machine Tool Industriesand related Manufacturing Technologies

www.cecimo.eu

IN THIS ISSUE

TRADE weakens and BUSINESS CONFIDENCE worsens in Europe and abroad.

Machine tool builders DOMESTIC AND FOREIGN ORDERS continue a downward trend.

Industrial production decreases in Europe, while CAPACITY UTILISATION grows at a slower pace.

Economic & Statistical

ToolboxSecond Quarter 2019

CECIMO Economic and Statistical ToolboxSecond Quarter 2019

2

Table of ContentsIntroduction

Mindmap

1 Historical Data for the Sector1.1 CECIMO8 Orders (m)1.2 CECIMO Trade (m)1.3 CECIMO Production (m)

2 Demand2.1 CECIMO Consumption. Oxford Economics Consumption Forecast (m)2.2 Peter Meier CECIMO8 Orders Forecast (m)2.3 Industrial Production Index (M)

3 Investment3.1 Gross Fixed Capital Formation (M)3.2 Capacity Utilisation in the Investment Goods Sector (M)3.3 Bank Lending Survey (M)3.4 Euribor – Interest rates (M)

4 Business Climate4.1 CECIMO Business Climate Barometer (m)4.2 Purchasing Managers Index (M)4.3 OECD Business Climate Indicator (M)

5 General Indicators 5.1 GDP (M)5.2 Inflation (M)5.3 Foreign exchange rates (M)

Glossary i

Geographical Information

Other symbols and acronyms


3

IntroductionThe machine tool industry continues slowing down in this second quarter of 2019, following the trend seen in the first quarter.

• Total CECIMO Orders decrease -23% in Q2-2019 on a yearly basis, greatly due to significant drops in domestic and foreign orders.

• CECIMO competitor also register losses in their respective order intakes.

Regarding machine tool trade, CECIMO exports increase slightly on a quarterly basis, but the yearly change registers losses for the sector. CECIMO export to key regional markets also fall. Exports to Russia and the CIS group however increase.

Updated production information shows that CECIMO output should decrease in 2019 compared to 2018. Estimates suggest that CECIMO production could fall by more than 5% this year.

Demand

• Recent consumption data show that CECIMO consumption grew in 2018 to 16,5 billion euros, but 2019 estimates suggest a -2,9% negative growth rate for this year compared to 2018.

• Orders are expected to decrease in the short term, as demand in capital goods market is in decline.

Investment continues to grow, but it increases at a slower pace. Capacity utilisation decreases this quarter, as it did the previous one. Financial conditions for companies tighten, while the ECB keeps its growth-supportive monetary policy in place.

Business climate worsens around the world. Global manufacturing PMI stands below the 50-point threshold as of July 2019.

GDP growth rates decelerate in Europe, the United States and China, while Japanese GDP flattens.

Key global currencies strengthen against the euro, but the European single currency remains relatively strong.


4

Toolbox Mind Map

Historical data for the Sector

Demand

Business climate

Investment

General Indicators

CECIMO8 Orders (m)

CECIMO Trade (m)

CECIMO Production (m)

Peter Meier Forecast (m)

Consumption Forecast OE (m)

Industrial Production Index (M)

Capacity utilisation (M)

Gross Fixed Capital Formation (M)

Bank Lending Survey (M)

Euribor – Interest rates (M)

CECIMO Business Climate Barometer (m)

Purchasing Managers Index (M)

OECD Business Confidence Indicator (M) GDP (M)

Inflation (M)

Foreign exchange rates (M)


5

1. Historical Data for the Sector1.1 Orders (m)

The second quarter of 2019 witnessed a -23% drop in total CECIMO 8 orders, against Q2 of 2018. In the meantime, foreign orders decreased -22% and domestic orders fell by -25%.

9891

115107

0

20

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160

180

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2013 2014 2015 2016 2017 2018 2019

MT Orders (Index 100 = 2015) CECIMO Domestic & Foreign Orders (2013-2019)

CECIMO domestic orders CECIMO foreign orders Domestic orders smoothed Foreign orders smoothed

CECIMO8 include:Austria The UKGermany FranceItaly Czech RepublicSwitzerland Spain

Breakdown by countries

Total Orders• General decrease in CECIMO 8 orders on a yearly basis (from Q2-2018 to Q2-2019), with steep

drops in Italy (-30%), Czech Republic (-37%) and France (-51%).• Decreases in other relevant countries are also significant: Switzerland (-19%), Germany

(-22%), Spain (-27%) and the United Kingdom (-28%). • Austria, with a -2% decrease, is the only CECIMO country with a single figure drop.

Domestic Orders• Domestic orders have decrease sharply as well, especially in Germany (-28%), UK (-36%),

Spain (-35%) Italy (-42%), France (-53%). • The Czech Republic has experienced a rather moderate drop (-6%) in comparison. • Switzerland and Austria on the other hand have both registered an increase in domestic

demand, with a 2% and 19% increase, respectively.


6

92

109108

117

0

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120

140

160

180


2013 2014 2015 2016 2017 2018 2019

MT Orders (Index 100 = 2015)

Axis Title

CECIMO8 Total Orders & Shipments (2013-2018)

CECIMO total orders CECIMO shipments Total orders smoothed Shipments smoothed

Our competitors

• Total Japanese metal forming orders continue the decreasing trend started in Q4 2018. The yearly decrease, from Q2 2018 to Q2 2019, is -26%, due mostly to drops in domestic orders (-24%) and foreign orders (-28%).

• Metal cutting orders also experience a significant yearly decrease as well (-33%), dragged by a strong decrease in domestic orders (-36%).

• US domestic orders have gone down -16%, a further decrease from that registered in the previous quarter.

• Taiwanese orders, lastly, fall, as the previous quarter, -10%, pushed down by similar drops in domestic (-9%) and foreign (-10%) orders.

Foreign orders• Foreign orders experience notable decreases too. In this regard, France and the Czech

Republic register the largest drops: -48% and -44%, respectively. • Four other countries register drops above 20%: Switzerland (-23%), United Kingdom (-23%),

Spain (-26%) and Italy (-27%).• Austria (-5%) and Germany (-18%) show the smallest drops.

In general terms, CECIMO8 MT orders have experience a slowdown, continuing the previous downward trend commented on the previous issue. The decreases are noticeable in the “big countries”, Germany and Italy, as well as other relevant members, such as UK and Spain. France however suffers drastic drops on all items, as explained.


7

CECIMO quarterly exports in Q2 2019:• Q2 2019 exports reached a volume of 5 billion euros, an increase of 5% from Q1 2019.• It is nonetheless a -6% drop compared to Q2 2018 exports volume. • Overall exports outside of the CECIMO area suffer a yearly decrease as well (-6%). • Exports to key regional markets fall: Asia (-8%), America (-9%) and Europe (-5). The African

market drops -1%. • Conversely, exports to Russia and CIS countries rebound from the previous Q1 drop and register

a 9% increase.

1.2 CECIMO Trade (m)

1.153,7

844,0767,9

2.969,52.825,6

151,4 165,5

0

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2500

3000

3500

2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2

Million EurosCECIMO quarterly exports (2016-2019)

Asia America Europe Russia + CIS

-8%

-9%

9%

-5%

92

85

102

102

78

30

50

70

90

110

130

150


2013 2014 2015 2016 2017 2018 2019

MT Orders (Index 100 = 2015) CECIMO 8 vs Competitors Orders (2013-2019)

CECIMO8 Japan USA Taiwan South Korea


8

Main export markets in Q2 2019:• More than 46% of CECIMO´s total exports go outside of the CECIMO area. • China remains CECIMO’s top export market in Q2 2019. Exports to the Chinese market in this

period were worth 733 million euros, a 10,6% increase compared to Q1 2019. • Considering the yearly change, CECIMO exports to China have decreased more then 13% in Q2

2019 compared to Q2 2018.• Exports to the United States market, CECIMO’s second international sales destination (534

million euros total worth), follow a similar trend: they increase 8,8% in Q2 2019 compared to Q1 2019, but register a 3,4% drop if compared to data from Q2 2018.

• Poland is CECIMO´s third largest foreign market (209 million euros worth of exports volume in Q2 2019).

• Russia recovers a key position in CECIMO´s foreign markets (4th destination overall; 131 million euros worth of exports). Exports have increased 22% on a quarterly basis and 12,7% on a yearly basis.

955887

148 146

19221825

0

500

1000

1500

2000

2500

2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2

Million EurosCECIMO quarterly imports (2016-2019)

ASIA AMERICA EUROPE

CECIMO quarterly imports in Q2 2019:• Imports reached a volume of 2.68 billion euros in Q2 2019, thus remaining stagnant compared

to the previous quarter. • In yearly terms (Q2 2018 to Q2 2019), CECIMO imports drop 5,6%. • In general, imports from CECIMO’s regional markets decrease: Asia (-7%), America (-1%), Europe

(-5%), Africa (-17%) as well as from other relevant international markets (-32%). • Once again, imports from Russia and CIS partners seem to divert from the general trend,

registering a positive (although small) growth rate of 2%. • Sharper expansion of exports to Europe (+13%).


9

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2016 2017 2018 2019

China 684 678 730 629 854 837 773 768 848 848 767 664 734

USA 449 482 550 491 526 509 596 539 553 576 628 492 535

Poland 215 188 219 197 203 198 231 242 246 269 265 219 210

Russia 154 106 137 100 136 118 184 143 117 135 185 107 131

India 68 89 122 96 89 98 124 96 103 97 137 104 102

Mexico 183 136 120 165 169 180 167 121 149 187 136 113 102

Japan 55 91 86 67 76 78 72 70 68 85 104 81 87

0

100

200

300

400

500

600

700

800

900

Main export destinations2016-2019

China USA Poland Russia India Mexico Japan

source: Eurostat, UN


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The latest output data provided by CECIMO national associations show an upward revision of CECIMO output to 28 billion euros in 2018, while total world output remains at 79,6 billion euros (as registered in Q1 2019). In terms of share, CECIMO would represent, according to this data, 35% of total world output.

As to 2019, our estimations suggest that CECIMO production would decrease from the previous 28 billion euros to around 27 billion euros. World output however would decrease as well to 76,9 billion euros. CECIMO’s share, given these estimates, would still represent 35% of total world output.

CECIMO production grew 9,8% in 2018, while recent estimates show that 2019 could be a down-year, with a -5,2% negative growth rate. Regarding world output, 2018 data shows a flat growth situation of 0,5%. 2019 estimates meanwhile suggest a contraction of world output by -3,4%.

28.022 27.173

77.583,5

32%36%

35%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

90.000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e

CECIMO ShareMillion Euros CECIMO Production (2006-2019e)

CECIMO Output World Output CECIMO share

1.3 Production (m)


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2. Demand2.1 CECIMO Consumption (m)Oxford Economics Consumption Forecast

Recent data shows that CECIMO machine tool consumption for 2018 was 16.5 billion euros, which represents a 2,3% increase from 2017. World consumption grew 23%, reaching a total volume of 71.7 billion euros that same year.

Forecast (Autumn 2019):• According to Oxford Economics, 2019 estimates suggest a -2,9% negative growth rate compared

to 2018, with a total consumption volume of 16 billion euros.• From 2020 to 2023, CECIMO machine tool consumption will still register negative growth rates

at first (2020, -0,1%), but should rebound strongly from 2021 onwards, with consecutive yearly increases (2021: 3,9%; 2022: 3,1%; 2023: 2,6%).

• World machine tool consumption for 2019 would reach 71.9 billion euros. This is a 22% increase compared to 2018.

• Moreover, machine tool consumption worldwide should follow a strong and steady upwards trend as of 2020, with growth rates consistently above 2,1%.

16.455 17.734

10.496 9.68612.432 12.393 12.739 13.698 15.309 15.733 16.147 16.526 16.044 15.928 16.555 17.075 17.513

48.277

56.103

36.449

48.961

64.647

70.100

61.266 61.889

69.97366.512

70.05371.772 71.924 72.810

75.45277.972

80.377

-0,7%

1,2% 3,6%

3,3%

3,1%

-50,0%

-40,0%

-30,0%

-20,0%

-10,0%

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

90.000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e 2022e 2023e

% changeIn million euros CECIMO & World Machine Tool Consumption Forecast

CECIMO World % change y-o-y CECIMO % change y-o-y world


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2.2 Peter Meier / HPO CECIMO8 Orders Forecast (m)

HPO states that the signs of an economic downturn are becoming ever clearer:

• OECD economies are showing negative growth rates. • Demand for capital goods is in decline, while demand for services remain somewhat dynamic.• Industrial production has already peaked in all regions, but with a few exceptions the level is

still relatively high.• Business confidence and expectations are slumping. • Peak consumption momentum will arrive in the coming months, followed by a weakening of

demand for consumer goods and services. • In Europe and the US retail trade is likely to remain highly dynamic until around the end of the

year. In Asia it has already fallen sharply and might continue to do so.• Financial bubbles might burst after a period of expansive monetary policies.

According to HPO Forecasting, order intake of the second quarter fell below the long-term trend. This means that CECIMO8 faces economic headwind in the short term. The smoothed 12mt average is still above the trend-line. However, HPO states that the 12mt average is expected to fall below the long-term trend by the beginning of 2020.


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105,9

92

108

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85,0

90,0

95,0

100,0

105,0

110,0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

MT Orders2015=100

Industrial Production Index2015=100

Industrial Production in the EU2008-2019

Industrial Production Index (quarterly average) EU CECIMO8 MT Orders CECIMO8 MT Orders 4Q moving average

Source: Eurostat + CECIMO

In June 2019, last month of Q2, industrial production decreased by -1,4% compared to the previous month both in EU 28 and the Euro Area (EA19).

The industrial production index stands at an average quarterly figure of 105,9 in EU28 and at 104,9 points in the EA for the same period. Compared the previous quarter, industrial activity fell by -0,7% in Eu28 and by -0,8% in EA 19. A yearly comparison (Q2 2018-Q2 2019) shows also general decrease in European industrial production: -0,6% in EU 28 and -1,3% in EA19.

2.3 Industrial Production Index (M)


14

16,5316,04 855

835

6,00

8,00

10,00

12,00

14,00

16,00

18,00

600

650

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900

MT Consumption (billion euros)GFCF (EU28, billion EUR) Gross Fixed Capital Formation

in the EU28 (2012-2019)

CECIMO MT Consumption GFCF in EU28 GFCF EU28 (4 quarter rolling)

3. Investment3.1 Gross Fixed Capital Formation (M)

Gross fixed capital formation grew 7% in Q2 2019 compared to the previous quarter. On a yearly basis, GFCF also increases, but at a slower pace (4%). The registered volume for GFCF in Q2 2019 is 855 billion euros.

According to the European Commission’s new estimations, total investment in the European Union would increase 3,8% in 2019, while investments int equipment would grow 1,7%. It is a stronger forecast for general invest compared to previous estimates (2,1% GFCF growth for this year) and a slightly better one for investment in equipment (previously 1,5% growth for 2019).


15

For the second quarter of 2019, capacity utilisation levels in the European Union stands at 86,2%. This is a -0,7% decrease compared to the previous quarter and a -1% drop on a yearly basis.

This is consistent with the downward trend European capacity utilisation has registered. Since the second quarter of 2018, the levels of capacity utilisation have decreased slowly, averaging -0,2%. Considering year on year percent changes, capacity utilisation grows at a positive but decreasing rates until Q1 2019, when it eventually becomes stagnant (0%), and ultimately decreases -1% in Q2-2019, as mentioned.

Production capacity increased 7,4% in Q2 2019, as opposed to 3,6% in Q1-2019.

3.2 Capacity Utilisation in the Investment Goods Sector (M)

86,2

108111

0

20

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65

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MT Orders 2015 = 100Capacity utilisation (%, seasonally adjusted)

Capacity utilisation in the investment goods sector in the EU2007-2019

Current level of capacity utilization MT Orders - smoothed MT Orders (1 q lag)


16

Capacity Utilisation (% of total capacity)

Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019Austria 89,4 88,3 89,6 85,8 87,8Czech Republic 91,3 88,5 89,8 87,8 85,5France 88,9 89,5 89,2 89,0 88,3Germany 88,8 91,1 88,9 89,9 89,5Italy 79,9 79,1 79,8 79,9 78,7Spain 87,7 86,7 85,5 86,4 87,5United Kingdom 87,7 84,4 85,8 82,6 81,2

3,6

7,4

108111

0

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-10

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MT Orders 2015 = 100Production capacity(balance seasonally adjusted)

Production capacity in the industrial goods sector in the EU2007-2019

Assessment of current production capacity MT Orders - smoothed MT Orders (1 q lag)

Production Capacity (balance in %)

Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019

Austria -3,6 -2,6 -3 0 6,1

Czech Republic 12,8 14,9 12,7 11,2 27,4

France -11,3 -9,6 -16,8 -13,3 -11,4

Germany -5,6 0,1 -1,3 1,5 9,6

Italy 18,5 17,2 19,9 19,2 20,7

Spain 7,8 6,4 12,9 4,4 0,4

United Kingdom 2,8 10 -3,2 23,9 14


17

0%6%

111

30

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130

-60%

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-20%

0%

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60%

Q1 08

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MT ordersindex 100 = 2015

Net demand for loansCredit standards for loans

Net Demand for Loansin the EA, 2008-2019

Net Demand for Loans MT orderssource: European Central Bank

3.3 Bank Lending Survey (M)

• Net demand for loans to enterprises increased 6% in Q2 2019 after a flat 0% rate in the previous quarter.

• Credit tightens however in Q2 2019 with a 5% rate. A positive percentage means that financial conditions are still restrictive for companies.

• CECIMO MT Orders have a 50% correlation with net demands for loans as of Q2 2019. Credit seems to tighten in this period and net demands increase. The financial markets is willing to support new investments, but it is becoming more selective.


18

-0,309%-0,113%0,000%

-1%

0%

1%

2%

3%

4%

5%

6%

1Q072Q073Q074Q071Q082Q083Q084Q081Q092Q093Q094Q091Q102Q103Q104Q101Q112Q113Q114Q111Q122Q123Q124Q121Q132Q133Q134Q131Q142Q143Q144Q141Q152Q153Q154Q151Q162Q163Q164Q161Q172Q173Q174Q171Q182Q183Q184Q181Q192Q19

Euribor rateInterest rates - EURIBOR

2007-2019

EURIBOR 3M Quarterly average EURIBOR 12M quarterly average ECB refinancing rate

source: Euribor database, ECB

3.4 Euribor - Interest Rates (M)

• Euribor 3-month Quarterly average for Q2 2019 stands at -0,310% while the 12-month average reaches -0,113% in this period.

• ECB refinancing rates, as previous quarters, remains at 0,00%.• ECB monetary policy is consistent with the institutions commitment to strengthening the euro

and guaranteeing stable financial conditions for companies in the Euro area.


19

4. Business Climate4.1 CECIMO Business Climate Barometer (m)

The Business Climate Barometer is a quarterly survey that assesses CECIMO-based companies’ current business sentiment and expectations for the next quarter.

By decision of CECIMO’s Economic Chairman, this Barometer will not be published in this edition of the Statistical Toolbox.

CECIMO Economic Department will thoroughly review the methodology behind the barometer in order to guarantee that the information and conclusions it provides are meaningful and relevant for CECIMO members.

4.2 Purchasing Managers Index (M)

90

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150

49

50

51

52

53

54

55

MT Orders2015=100

PMI Global Manufacturing PMI vs Total CECIMO8 Orders

Global manufacturing PMI CECIMO8 Total orders

• Global manufacturing PMI remains below the 50-point threshold in July (49,3) and August (49,5). July marked one of the lowest points in the series for this business sentiment index since 2012.

• This takes place in a period of strong decreases in domestic, foreign and total orders for CECIMO countries, as discussed above.


20

47

43,1

51,1

43,2

48,5

50,7

47,448,2

44,7

46,7

48

-1,1%

-6,1%

-1,5%

-4,0%

0,2% 0,0%

-2,1%

0,6%

-6,3%

-2,5%

0,0%

-7,0%

-5,0%

-3,0%

-1,0%

1,0%

3,0%

5,0%

7,0%

40

42

44

46

48

50

52

54

Austria CzechRepublic

France Germany Italy Netherlands Poland Spain Switzerland Turkey UnitedKingdom

% changePMIPMI monthly % change Europe

July 2019

Manufacturing PMI % change

• Business confidence keeps decreasing the Eurozone countries. Eurozone PMI stands at 46,5 in July 2019. It is a decrease against May’s PMI (47,7). The index remains below the 50-point threshold since Q1 2019 and seems to be locked in a downward trend, which means that business confidence is slowly eroding in Europe.

• In the UK, manufacturing PMI for July 2019 is 48 points, slightly stronger the one from the Eurozone, but nonetheless below the no-change line of 50 points.

• Switzerland registers on of the lowest PMIs for European countries in July, with 44,7 points. Compared to May 2019, which registered a comparatively strong 48,6 PMI, Swiss business confidence decreased.

• These drops in business expectations and confidence are consistent with the decrease in MT builders’ orders.


21

49,9

52,5

49,4

47,348,1

49,3

1,0% 0,8%0,2%

-0,4%

5,7%

1,4%

-1,0%

0,0%

1,0%

2,0%

3,0%

4,0%

5,0%

6,0%

7,0%

42

44

46

48

50

52

54

56

58

China India Japan South Korea Taiwan Russia

% ChangePMI

PMI monthly % change AsiaJuly 2019


• PMI in China sits just below the threshold in July 2019 (49,9) after the no-change value recorded in May 2019 (50,2). There are uncertainties as to the performance of the Chinese economy as the trade war with the United States continues.

• India PMI for July 2019 is 52,5, above the threshold. Indian business confidence however appears to be deteriorating. From May to July, business confidence dropped -0,4%, after months of stagnant and negative growth.

• Japanese PMI slowly decreases as well. In May 2019 the registered value was 49,8 while the index dropped to 49,4 in July 2019. This continues a downward trend in overall business confidence for the Japanese manufactures and it the first quarter in which business confidence is clearly below the 50-point threshold.

• South Korean PMI for July 2019 is 47,3. It is one point below the registered value for May 2019 (48,4) and the lowest score registered in the past two years. It is important to note that South Korean PMI has been consistently below the 50-point mark since March 2018.

• Taiwanese PMI remains somewhat stagnant. In July 2019, the country’s PMI stood at 48,1 points, the lowest registered value since January 2019 (47,5). Taiwanese manufactures and businesses struggle to recover their confidence in the economy, as PMI has not registered a 50 (or higher) value since September 2018.

• Regarding Russian manufacturers and businesses, their confidence in the economic environment lies below the 50-point mark this quarter: 49,8 in May 2019 and 49,3 in July 2019. Compared to the previous, when PMI reached a value of 52,8 (March), Q2 2019 economic environment seems weaker.


22

50,449,9 50,2

49,8

-0,4%

-2,2%

2,0%

1,2%

-2,5%

-2,0%

-1,5%

-1,0%

-0,5%

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

42

44

46

48

50

52

54

56

USA Brazil Canada Mexico

% ChangePMI PMI monthly % change AmericaJuly 2019


• PMI values in the United States are clearly above the 50-point threshold, but business confidence has decreased over the successive periods. PMI for May’s was 50,5 while that of July 2019 was 50,4. This is the result of consecutive periods of negative growth between Q1 and Q2 2019. Although businesses are more confident than their European counterparts, their trust in the economy and manufacturing has dwindled. Since May 2018, with a high point of 56,4 PMI, the index values have consistently decreased to that registered in July 2019.

• As for Brazil, PMI is stagnant. In July 2019, PMI stood at 49,9. It is the first time in more than two year that Brazilian PMI is below albeit slightly below the threshold (the last time was March 2017, 49,6 PMI). So far in 2019, Brazilian PMI has either experienced flat growth (Q1 2019) or decreased (-2,6% on average in Q2 2019).

• Canadian PMI in July was 50,2, one point higher than May’s 49,1. Canadian manufacturers confidence follows a similar trend than that of US: confidence is strong in general terms, with index values clearly above the mentioned threshold since mid-2016, but it grows weaker. 2019 has been especially negative for businesses as growth rates are negative (-4,1% in Q1 and -3,7% in Q2).

• Lastly, PMI in Mexico moves between values close to the threshold. For instance, PMI was 49,8 in July and 50 in May. A similar trend was seen between January and March. Manufacturer’s confidence does not improve.

4.3 OECD Business Confidence Indicator (M)

In July 2019, at the end of Q2 2019, the OECD Business Confidence Indicator decreased to 99,3 points (a -0,17% drop compared to June’s 99,8 BCI). It continues a downward trend that started in May 2019 and lasts to this date (three consecutive months of negative growth).

On a quarterly basis, OECD BCI correlates with CECIMO8 MT Orders moving average by 93%. Thus, new decreases in MT orders intake might take place along with a further loss of business confidence in developed countries.


23

108

99,9

92,0

93,0

94,0

95,0

96,0

97,0

98,0

99,0

100,0

101,0

102,0

103,0

-10

10

30

50

70

90

110

130

150

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

BCIMT Orders

OECD Business Confidence Indicator for Europe2008-2019

Smoothed CECIMO8 Orders OECD Total quarterly

Commentary on the retrieved data for July 2019:• The OECD average is below the 100-point threshold (99,6).• At the end of Q2 2019, Russia has the highest business confidence of the OECD group, with a

101,1 BCI.• Other countries with above-average BCI are France and Italy (100,2 points each). • The Euro zone has a 99,9 BCI, slightly above the OECD average.• Key countries like China (99,6), Germany (99,6) are in line with the OECD average, while the

United States register a 99,5 BCI. • Turkey, as in the previous quarter, records a 96,8 BCI, the lowest score of the selected countries.

101,1

100,2 100,2 99,9 99,8 99,7 99,6 99,6 99,5 99,4 99,3 99,2

98,7 98,3

96,8

94,0

95,0

96,0

97,0

98,0

99,0

100,0

101,0

102,0

Russia Italy France EA19 Austria OECD -Europe

OECD Germany UnitedStates

Mexico UnitedKingdom

CzechRepublic

China Korea Turkey

BCI

OECD Business Confidence Indicator (BCI)July 2019


24

• Quarterly GDP grew 1,6% in EU28 countries.• US GDP increased 2,4% this quarters.• GDP growth in Japan for Q2 was 0,8%, nearing flat growth scenario. • Chinese GDP grew 6,2%.

• Q2 2019 GDP growth rates have decreased compared to those of the previous quarter.

1,4

2,4

6,2

0,8

-2,0

0,0

2,0

4,0

6,0

8,0

10,0

12,0

2010

-Q1

2010

-Q2

2010

-Q3

2010

-Q4

2011-

Q1

2011-

Q2

2011-

Q3

2011-

Q4

2012

-Q1

2012

-Q2

2012

-Q3

2012

-Q4

2013

-Q1

2013

-Q2

2013

-Q3

2013

-Q4

2014

-Q1

2014

-Q2

2014

-Q3

2014

-Q4

2015

-Q1

2015

-Q2

2015

-Q3

2015

-Q4

2016

-Q1

2016

-Q2

2016

-Q3

2016

-Q4

2017-

Q1

2017-

Q2

2017-

Q3

2017-

Q4

2018

-Q1

2018

-Q2

2018

-Q3

2018

-Q4

2019

-Q1

2019

-Q2

% change, same period previous year GDP quarterly growth2010-2019

EU28 USA China Japan

5. General Indicators5.1 GDP (M)


25

1,4

1,0

1,8

2,8

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

Inflation rate, %

Inflation (2017-2019)

EU28 EA19 US China

5.2 Inflation (M)

• In July 2019, the inflation rate in EU28 was 1,4%, while Euro zone inflation 1%. • Inflation in the US was 1,8%, consistent with the previous months.

Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19

United Kingdom 1,8 1,8 1,8 2 1,9 2,0 2,1

Austria 1,7 1,4 1,7 1,7 1,7 1,6 1,4

France 1,4 1,6 1,3 1,5 1,1 1,4 1,3

Germany 1,7 1,7 1,4 2,1 1,3 1,5 1,1

Spain 1,0 1,1 1,3 1,6 0,9 0,6 0,6

Switzerland 0,7 0,7 0,7 1,1 0,5 0,7 0,4

Italy 0,9 1,1 1,1 1,1 0,9 0,8 0,3

Monthly inflation rate for CECIMO countries (2019)


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5.3 Foreign Exchange Rates (M)

121,4

110,0

115,0

120,0

125,0

130,0

135,0

140,0

15-07 15-09 15-11 16-01 16-03 16-05 16-07 16-09 16-11 17-01 17-03 17-05 17-07 17-09 17-11 18-01 18-03 18-05 18-07 18-09 18-11 19-01 19-03 19-05 19-07

JPY

per 1

EUR

(Mon

tly av

erag

e)

0,899

0,650

0,700

0,750

0,800

0,850

0,900

0,950

15-0

7

15-0

9

15-11

16-0

1

16-0

3

16-0

5

16-0

7

16-0

9

16-11

17-01

17-03

17-05

17-07

17-09 17-

11

18-0

1

18-0

3

18-0

5

18-0

7

18-0

9

18-11

19-0

1

19-0

3

19-0

5

19-0

7

GBP

per 1

EUR

(Mon

thly

aver

age)

1,122

1,000

1,050

1,100

1,150

1,200

1,250

15-0

7

15-0

9

15-11

16-0

1

16-0

3

16-0

5

16-0

7

16-0

9

16-11

17-01

17-03

17-05

17-07

17-09 17-

11

18-0

1

18-0

3

18-0

5

18-0

7

18-0

9

18-11

19-0

1

19-0

3

19-0

5

19-0

7

USD

per 1

EUR

(Mon

thly

aver

age)

7,715

6,800

7,000

7,200

7,400

7,600

7,800

8,000

8,200

15-0

7

15-0

9

15-11

16-0

1

16-0

3

16-0

5

16-0

7

16-0

9

16-11

17-01

17-03

17-05

17-07

17-09 17-

11

18-0

1

18-0

3

18-0

5

18-0

7

18-0

9

18-11

19-0

1

19-0

3

19-0

5

19-0

7

CNY

per 1

EUR

(mon

thly

aver

age)

1,108

1,060

1,080

1,100

1,120

1,140

1,160

1,180

1,200

15-0

7

15-0

9

15-11

16-0

1

16-0

3

16-0

5

16-0

7

16-0

9

16-11

17-01

17-03

17-05

17-07

17-09 17-

11

18-0

1

18-0

3

18-0

5

18-0

7

18-0

9

18-11

19-0

1

19-0

3

19-0

5

19-0

7

CHF p

er 1 E

UR (M

onth

ly av

erag

e)

The Japanese Yen continues to strengthen against the euro after briefly pricing out in Spring 2019. The Yen-Euro ratio is almost 9 points below the 2018 average as of Q2 2019.

The British Pound has progresses around the 2018 average (0,88 per Euro). In July, however, it recovered ground and neared the 0,90 mark (similar to that of July 2018).

US Dollar follows the previous trend, gaining value against the Euro. July nevertheless has slightly deviated from this, as the Dollar’s relative price hikes, but the overall trends ensues.

The Chinese Yuan’s price increase in Spring 2019, fueled by a heavy increase of US tariffs, is followed in July by a slight strengthening of the Yuan. The Chinese currency currently stands below the 2018 average and well above the 7.00 threshold.

The Swiss Franc weakens against the Euro and sinks deeper away from the 2018 average, which confirms last quarter’s expectations. Poor economic performance in the EU and weak

business confidence are to blame.


27


28

Glossary i

1.1 CECIMO8 orders This section presents the “new orders received index” showing the development of the machine tool demand as an indication of future production. An order is defined as the value of the contract linking a producer and a third party in respect of the provision by the producer of goods and services. The CECIMO8 orders index combines the relevant indexes of Austria, the Czech Republic, France, Germany, Italy, Spain, Switzerland and the United Kingdom. The weights of the different indexes correspond to the countries shares in total production of the eight countries in 2010. The new orders received are split according to the origin of the order, based on the change of ownership. This identification is the basis for domestic and foreign new orders. The origin is determined by the residency of the third party that has made the order.

2.3 Industrial Production IndexThe objective of the production index is to measure changes in the volume of output at close and regular intervals, normally monthly. It provides a measure of the volume trend in value added over a given reference period. The production index is a theoretical measure that must be approximated by practical measures. Value added at basic prices can be calculated from turnover (excluding VAT and other similar deductible taxes directly linked to turnover), plus capitalised production, plus other operating income plus or minus the changes in stocks, minus the purchases of goods and services, minus taxes on products which are linked to turnover but not deductible plus any subsidies on products received. Industrial production is compiled as a fixed base year Laspeyres type volume-index. Base period: Year 2010 = 100.Source: Eurostat.

3.1 Gross Fixed Capital Formation The Gross Fixed Capital Formation (GFCF) consists of resident producers´ aquisitions, less disposals, of fixed tangible or intangible assets. This covers in particular machinery and equipment, vehicles, dwellings and other buildings. The GFCF is a key determinant of both aggregate demand and supply.Source: Eurostat and ECB.

3.2 Capacity Utilisation in the Investment Goods Sector Population: Investment goods producers. Data covered: Assessment of current production capacity, measured as a balance (seasonally adjusted); Current level of capacity utilization, measured in % (seasonally adjusted). More than 38.000 industrial firms are surveyed every month, while the biannual investment survey includes over 44.000 units. Answers obtained from the surveys are aggregated in the form of “balances”. Balances are constructed as the difference between the percentages of respondents giving positive and negative replies. The Commission calculates EU and euro-area aggregates on the basis of the national results and seasonally adjusts the balance series.http://ec.europa.eu/economy_finance/db_indicators/surveys/documents/userguide_ en.pdf


29

3.3 Bank Lending Survey The bank lending survey is addressed to senior loan officers of a representative sample of euro area banks. Its main purpose is to enhance the understanding of bank lending behaviour in the euro area. The questions distinguish between three categories of loan: loans or credit lines to enterprises; loans to households for house purchase; and consumer credit and other lending to households. For all three categories, questions are posed on credit standards for approving loans; credit terms and conditions; and credit demand and the factors affecting it. The responses to questions related to credit standards are analysed in this report by focusing on the difference (“net percentage”) between the share of banks reporting that credit standards have been tightened and the share of banks reporting that they have been eased. A positive net percentage indicates that a larger proportion of banks have tightened credit standards (“net tightening”), whereas a negative net percentage indicates that a larger proportion of banks have eased credit standards (“net easing”). Likewise, the term “net demand” refers to the difference between the share of banks reporting an increase in loan demand and the share of banks reporting a decline. Net demand will therefore be positive if a larger proportion of banks have reported an increase in loan demand, whereas negative net demand indicates that a larger proportion of banks have reported a decline in loan demand. http://www.ecb.eu/stats/money/surveys/lend/html/index.en.html

3.4 Interest Rates - EuriborEuribor® (EURo InterBank Offered Rate) is the rate at which euro interbank term deposits are being offered by one prime bank to another within the EMU zone. Monthly data are calculated as averages of daily values from the banks with the highest volume of business in the euro area money markets.http://www.euribor-ebf.eu/The deposit facility rate is the one the banks receive for depositing money with the central bank overnight.The so-called main refinancing rate, minimum bid rate or rate for the main refinancing operations (MROs) is the interest rate which banks do have to pay when they borrow money from the ECB for a period of one week.

4.2 Purchasing Managers’ Index (PMI)The Global Report on Manufacturing is compiled by IHS Markit and J.P. Morgan in association with ISM and IFPSM based on the results of surveys covering 9.000 purchasing executives in 30 countries. Together these countries account for an estimated 86% of global manufacturing output. Questions are asked about real events and are not opinion based. Data are presented in the form of diffusion indices, where an index reading above 50,0 indicates an increase in the variable since the previous month, below 50,0 a decrease and equal to 50.0 means no change on prior month. All the indices are seasonally adjusted at the national sector level.http://www.markiteconomics.com/Survey/Page.mvc/AboutPMIData


30

4.3 OECD Business Confidence Indicator (BCI) for EuropeThe Composite leading indicators (CLI), which BCI is part of, comprises a set of component series selected from a wide range of key short-term economic indicators to ensure that the indicators will still be suitable when changes in economic structures occur in future. CLIs are calculated for 33 OECD countries (Iceland is not included) and several regional aggregates, based on enterprises’ assessment of production, orders and stocks, together with its current position and expectations for the near future. These indexes are designed to anticipate turning points in economic activity relative to trend, on average 6 to 9 months before they happen. While theory says that a turning point in the CLI signals a turning point in the reference series, such turning points, in reality, are determined by a complicated process. Turning points in the detrended reference series are usually found about 4 to 8 months in advance. Therefore, one often needs to wait for several periods to draw a more definite conclusion. A useful way to exploit the information in CLIs is to take their year-on-year growth rate.Typical indictors in the CLI include orders and inventories changes, financial market indicators, business confidence surveys and data on key sectors and trend in the main trade partners.The standardised BCIs represent only the manufacturing sector. It is based on companies’ assessment of production, orders, stocks and its current position and expectations. BCI shows a long-term trend in industrial production (with a 6-month time-lag). An increase over 100 means expansion; a decrease above 100 means a downturn; an increase below 100 is an upturn and a decrease below 100 is a slowdown. http://stats.oecd.org/mei/default.asp?lang=e&subject=5


31

Geographical Information CECIMO countries

The European Association of the Machine Tool Industries and related Manufacturing Technologies brings together 15 national associations of machine tool builders from the following countries: Austria, Belgium, the Czech Republic, Denmark, Finland, France, Germany, Italy, the Netherlands, Portugal, Spain, Sweden, Switzerland, Turkey and the United Kingdom.

Euro area (EA) / Eurozone (EZ)The euro area (EA19), also called the Eurozone, consists of Member States of the European Union that have adopted the euro as their currency. It includes Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.

European Union (EU)The European Union (EU28) includes Belgium, Bulgaria, the Czech Republic, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland, Sweden and the United Kingdom.


32

Other Symbols and AcronymsM / m (Toolbox headings)M = Macro-economic. non-caps (m) = microeconomic.

GDPGross Domestic Product

BillionBillion means one thousand million

USUnited States

Q1, Q2, Q3, Q41st quarter, 2nd quarter, 3rd quarter, 4th quarter

EUR / €Euros

USD / $United States Dollar(s)

CHFSwiss Franc(s)

ECBEuropean Central Bank

FedFederal Reserve (System), the US Central Bank

GBPGreat Britain Pound(s), the Pound Sterling

IMFInternational Monetary Fund

WBWorld Bank

MTMachine tools

CECIMO countriesCountries whose machine tool sector is represented by CECIMO


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CREDITSCECIMO

Economic and Statistical Toolbox

PublisherFilip Geerts

AuthorJosé Díaz

Copyediting & Production Giorgia Zia

EMO® is a registered trademark of CECIMO

Member AssociationsAustria: Metaltechnology Austria Association of Metaltechnology Industrieswww.metalltechnischeindustrie.at

Belgium: AGORIA Federatie van de Technologische Industriewww.agoria.be

Czech Republic: SSTSvazu Strojírenské Technologiewww.sst.cz

Danish Manufacturing Industries CooperationA part of the Confederation of Danish Industry www.isa.di.dk

Finland: Technology Industries of Finland www.teknologiateollisuus.fi

France: SYMOPSyndicat des Entreprises de Technologies de Productionwww.symop.com/fr

Germany: VDW Verein Deutscher Werkzeugmaschinenfabriken e.V. www.vdw.de

Italy: UCIMUAssociazione dei costruttori Italiani di macchine utensili robot e automazionewww.ucimu.it

Netherlands: FPT-VIMAG Federatie Productie Technologie / Sectie VIMAG www.ftp-vimag.nl

Portugal: AIMMAP Associacâo dos Industriais Metalúrgicos, Metalomecãnicos e Afins de Portugal www.aimmap.pt

Spain: AFM - Advanced Manufacturing Technologies Asociación española de fabricantes de máquinas-herramienta, accesorios, componentes y herramientas www.afm.es

Sweden: SVMF Machine and Tool Association of Swedenwww.svmf.se

Switzerland: SWISSMEMDie Schweizer Maschinen-, Elektro- und Metall-Industrie www.swissmem.ch

Turkey: MIBMakina Imalatcilari Birligi www.mib.org.tr

United Kingdom: MTA The Manufacturing Technologies Association www.mta.org.uk

is the European Association representing the common interests of the Machine Tool Industries and

related manufacturing technologies globally and at EU level. We bring together 15 National Associations of machine tool builders, which represent approximately 1500 industrial enterprises in Europe (EU + EFTA + Turkey), over 80% of which are SMEs. CECIMO covers more than 98% of total machine tool production in Europe and more than one third worldwide. CECIMO assumes a key role in determining the strategic direction of the European machine tool industry and promotes the development of the sector in the fields of economy, technology and science.

www.cecimo.eu

Avenue Louise 66, 1050 Brussels, BelgiumTel: +32 (0)2 502 70 90

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